2642948 Ontario Inc. v. Jonny’s Antiques Ltd., 2025 ONCA 892
Why This Matters to Transactional Lawyers
As a transactional real estate lawyer, you’ve likely drafted countless mortgage agreements with standard remedies clauses. But have you ever considered what happens when your client actually needs to enforce those provisions? The Ontario Court of Appeal’s recent decision in 2642948 Ontario Inc. v. Jonny’s Antiques Ltd. provides important clarity on when mortgagees can take peaceable possession of property without court intervention, and why proper drafting and documentation matter.
The Facts
264 Ontario held a mortgage on commercial property in Shakespeare, Ontario. After the mortgagor, Jonny’s Antiques, allegedly defaulted, 264 Ontario took steps to enforce its security. Following repeated unsuccessful attempts to serve notices at the property throughout late 2023 and early 2024, 264 Ontario hired a bailiff who attended the property in April 2024, found it vacant, entered, and changed the locks.
The mortgagor wasn’t pleased. Jonny’s Antiques attempted to break back in, and when that failed, obtained a certificate of pending litigation (“CPL”) to cloud title. 264 Ontario filed a motion to set aside the CPL. By the time the motion was granted, 264 Ontario had already entered into an agreement to sell the property. Jonny’s Antiques moved for a stay pending its appeal of the decision, but the stay was denied and the sale eventually closed.
The Key Legal Issues
The appeal centered on four main arguments, all of which the Court of Appeal rejected:
- Default Determination
Jonny’s Antiques argued the motion judge failed to determine whether default had occurred. The Court disagreed. It found this determination was implicit in the motion judge’s reasons, which referenced a July 2023 demand letter requiring payment by October 2023 and noted that Jonny’s Antiques failed to respond or make payment.
Practice tip: Ensure your clients document demands for payment clearly and maintain records of non-response. These details matter when enforcement becomes necessary.
- Vacant Possession
Jonny’s Antiques challenged the finding that the property was vacant when the locks were changed. The Court found ample evidence supporting vacancy, such as returned registered mail sent to the property address, a process server finding no one present on multiple February 2024 visits, and the bailiff’s April 2024 observations.
Practice tip: Advise mortgagee clients to document vacancy thoroughly through multiple methods and dates. This evidence becomes critical if possession is challenged.
- Scope of Relief
Jonny’s Antiques argued that the motion judge erred in granting 264 Ontario a declaration that it was lawfully in possession of the property, because no such relief was claimed in its statement of claim. The Court noted that 264 Ontario had no basis to seek such relief when initially commencing the action, as it had not yet taken possession. The declaration was properly sought in the notice of motion once circumstances changed.
Practice tip: Remind clients that pleadings can and should evolve as facts develop. What wasn’t relevant at commencement may become crucial relief as the matter progresses.
- Right to Trial
The mortgagor’s central complaint was that the motion judge allowed enforcement without a trial, allegedly contrary to the Mortgages Act. The Court firmly rejected this, confirming that the standard mortgage terms entitled the mortgagee to self-help remedies, including entering, taking possession, and selling the property to recover debt, all without obtaining a writ of possession first.
The Court applied the test from Hume v. 11534599 Canada Corp., 2022 ONCA 575, emphasizing that whether peaceable possession was obtained is a fact-specific determination entitled to deference absent palpable and overriding error.
The Motion to Quash
In an interesting procedural twist, 264 Ontario moved to quash the appeal as frivolous and abusive. The Court dismissed this motion, even while dismissing the appeal itself, noting that the appeal wasn’t “manifestly devoid of any merit.”
The Court made an important practice observation: motions to quash based on alleged lack of merit, filed after an appeal is perfected, “generally serve no purpose except to increase the costs of the proceeding for all parties.” The Court awarded no costs given the parties’ divided success.
Practice tip: Think carefully before advising clients to bring motions to quash on merit grounds alone, especially late in the process.
Takeaways for Transactional Lawyers
- Draft clearly: Standard mortgage terms matter. Ensure your mortgage agreements explicitly reserve self-help remedies including the right to enter and take possession upon default.
- Document everything: Advise mortgagee clients to create detailed records of service attempts, property inspections, and vacancy observations before taking possession.
- Understand peaceable possession: The Hume test governs when self-help is permissible. Familiarize yourself with this framework so you can advise clients appropriately when deals go sideways.
- Trials aren’t always required: Mortgage enforcement through peaceable possession can proceed on motion where the facts support it, but only with proper documentation and compliance with contractual and statutory requirements.
- Plan for evolution: Legal positions and required relief may change as circumstances develop. Build flexibility into your enforcement strategy from the outset.
While litigation may not be your daily practice, understanding how the mortgages you draft get enforced helps you better protect your clients’ interests at the transaction stage. This decision confirms that well-drafted mortgage terms, combined with careful documentation, can provide mortgagees with powerful self-help remedies with no trial required.
