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The decision in 2642948 Ontario Inc. v. Jonny’s Antiques Ltd. offers important clarity on the scope of a mortgagee’s right to take possession of a property – even without a writ – under the self-help remedies established by the Ontario Mortgages Act. It confirms those enforcement rights by mortgagees where possession is taken peaceably, and in accordance with the mortgage’s terms.

The facts involved a lender, 2642948 Ontario Inc. (the “corporation”), which was a holding company controlled by an 83-year woman named Kwik.  The borrower was Jonny’s Antiques, which owned premises that housed an antiques business. 

The corporation financed a share purchase by the borrower through an 11-month vendor take-back mortgage for $385,000. The borrower, operated by its principal Johnson, fell into arrears in 2019.  The corporation repeatedly issued demands for payment of both arrears and principal, but to no avail.

About 8 month later, in 2020, Johnson met with Kwik and persuaded her to accept temporary interest-only payments. He explained that the business was struggling due to the COVID-19 pandemic. Kwik acquiesced as an indulgence, but never agreed to vary or renew the mortgage itself.

Over the next three years, the principal remained unpaid, and in mid-2023, the corporation renewed its demands. Kwik ultimately served Johnson with a Notice of Sale, and commenced mortgage enforcement proceedings against the borrower.  Believing the property to be vacant, she retained a bailiff to change the locks, and began preparing the property for sale. Johnson then broke in, claimed possession, and on an urgent basis obtained both a Certificate of Pending Litigation (CPL) and a court order declaring that Jonny’s Antiques was in possession. Kwik then brought a motion to set those orders aside, and to declare the corporation was the one validly in possession.

First, the court examined the basis on which Johnson had obtained the CPL, and concluded he had misled the court. 

Under the procedural rules, Johnson was obliged to “make full and fair disclosure of all material facts” to the judge when requesting the CPL. Here, Johnson had omitted critical information, including the 2019 maturity date, the prior demand letters, and his receipt of the Notice of Sale. Those omissions were material, since they concealed the borrower’s clear default under the mortgage. Johnson also had no equitable interest in land to support the CPL, since the alleged oral agreement to vary the mortgage was unenforceable under the Statute of Frauds. The balance of prejudice also favoured the lender corporation, since it had been prevented from realizing on its security for five years.

Next, the court also rejected Johnson’s argument that Kwik’s action in changing the locks, as a self-help remedy in its role of mortgagee, was unlawful. Nothing in the Ontario Mortgages Act prohibited Kwik from taking possession even without a court order in the circumstances. That legislation provides that in response to a default, a mortgagee “shall have quiet possession” of the property. Furthermore, the standard charge terms in a mortgage expressly permit a mortgagee, upon default, to “enter into and take possession of the land” and to lease or sell it. Although court assistance is available, it is not mandatory where possession can be taken “peaceably” – meaning without violence or confrontation. This is assessed by looking at factors such as whether the property was vacant, if there was any resistance, and whether the property was residential.

Here, Kwik’s taking of possession met all the criteria for peaceable possession:  The bailiff had found the property vacant, Johnson had ignored multiple notices, and there was no resistance at the time the locks were changed.  Although the building contained a residential portion, Johnson admitted it was not used as a residence; it was all used for commercial purposes.  

Given Kwik’s valid taking of peaceable possession, the court ordered the CPL vacated and the prior possession order set aside. It also declared the corporation to be validly in possession of the property.   See: 2642948 Ontario Inc. v. Jonny’s Antiques Ltd., 2025 ONSC 2059, related reasons rejecting a stay pending appeal at 2025 ONCA 381.