Ontario court rejects last-minute bid to stop $1.025-million mortgage sale

An Ontario Superior Court of Justice judge refused to stop a $1.025-million mortgage power-of-sale transaction two days before its scheduled closing, finding that the borrowers had not supplied the evidence needed for an injunction.

In reasons released September 30 in Medeiros et al v. Gahunia et al, 2026 ONSC 4929, Justice A. P. Ramsay explained the dismissal of an urgent motion heard July 27. The ruling addressed whether the sale should be restrained. It did not award damages or finally resolve the borrowers’ claim that the property had been sold for too little.

A firm sale and a disputed price

The borrowers owned a tenanted residential property in Etobicoke. They had entered a one-year, $350,000 loan agreement with a private lender in August 2024. That mortgage, registered in sixth priority, matured in August 2025, and the borrowers were in default.

By the time of the hearing, the lender had accepted a firm offer, with closing scheduled for July 29. The borrowers challenged his possession of the property and the sale process. They said the price was $215,000 below their own appraised value and sought temporary protection for the property and sale proceeds while their application was considered.

The lender opposed the delay. The borrowers had not repaid the mortgage, paid money into court, offered substitute security or produced a better offer. He said the property had been marketed on the MLS, shown to prospective purchasers and subjected to competing offers before the firm agreement was accepted.

Evidence did not support stopping the sale

The court considered the three requirements for an interlocutory injunction: a serious issue to be tried, irreparable harm if relief were refused, and a balance of convenience favouring the injunction.

On the motion record, the judge was not persuaded that the borrowers had established a serious issue concerning the notice of sale, possession or sale price. Although they questioned the notice’s validity, they had identified no actual defect or statutory non-compliance that would invalidate it.

The judge also rejected the contention that taking possession necessarily required a court-issued writ. Whether possession is peaceable depends on the circumstances, the reasons explain. Here, there was no evidence of violence, threats or changed locks, and the tenants had supplied no evidence that possession was obtained by force. The borrowers were not living at the property when the lender took possession.

The valuation evidence also fell short. The judge identified deficiencies in a real estate broker’s affidavit, including unsupported opinions and references to buyer interest without details of any actual offers. The lender’s unchallenged evidence was that the owners had previously listed the property at higher prices and failed to sell it.

Timing mattered too. Applying Ontario appeal decisions, the judge emphasized the legal significance of a lender acting in good faith having already entered a binding sale agreement. The borrowers had produced no competing offer, and the judge concluded that even a later, higher offer would not displace the agreement already in place in these circumstances.

A possible damages claim was different from an injunction

The borrowers argued that a transfer of title and distribution of the proceeds would cause irreparable harm. The court found their central complaint was monetary: the property should have sold for more. If they could establish an improvident sale, damages or an accounting could provide a remedy.

The court also found that delaying closing risked costing the lender a firm transaction. Seven mortgages and significant tax debt affected the property, undermining the practical value of the borrowers’ promise to compensate for losses caused by an injunction.

The judge refused the requested injunction and also declined a certificate of pending litigation, which had not been claimed in the originating application. Costs remained to be agreed or addressed through submissions.

The decision illustrates the difference between proving a basis to halt an imminent mortgage sale and pursuing compensation over how that sale was conducted. The refusal to stop this transaction was not a damages award or a blanket approval of every disputed aspect of the lender’s conduct.