Royal Trust v. Potash

Royal Trust v. Potash

The court held that s.10 protects a mortgagor's right to prepay at five‑year intervals but a mortgagor who knowingly elects to renew for another valid term (including where the renewal 'deems' a new mortgage date) is exercising choice rather than effecting an unenforceable waiver; where a renewal validly 'deems' a new date and its term does not exceed five years, the mortgagor cannot prepay until the end of that renewal term, whereas any clause purporting to permanently relinquish the statutory right would be unenforceable.

Citation
[1986] 2 SCR 351
Parties
Appellant (mortgagee): The Royal Trust Company; Respondent (mortgagor): Ben Potash
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
9 October 1986
Procedural Posture
Appeal / Supreme Court of Canada Judgment on Appeal From Manitoba Court of Appeal
Outcome
Appeal allowed; order of the Manitoba Court of Appeal set aside; order of Kroft J. dismissing respondent's application restored.
Legal Topics
Prepayment, Mortgage Renewal, Deeming Clause, Right to Redeem, Waiver of Statutory Rights
Source Language
English
Mortgage Law Property Law Contract Law Statutory Interpretation Banking and Finance Prepayment Mortgage Renewal Deeming Clause +2 more

Case Brief

Summary, issues, holding and outcome

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Parties

The Royal Trust Company

Appellant (mortgagee)

Ben Potash

Respondent (mortgagor)

Procedural Posture

Appeal / Supreme Court of Canada Judgment on Appeal From Manitoba Court of Appeal

Legal Issues

  1. 1 When may a mortgagor prepay a mortgage pursuant to s.10 of the Interest Act?
  2. 2 May a mortgagor contract out of or waive the prepayment right granted by s.10?
  3. 3 If waiver/contracting out is possible, was there such a waiver or contracting out in this case?

Ratio Decidendi

The court held that s.10 protects a mortgagor's right to prepay at five‑year intervals but a mortgagor who knowingly elects to renew for another valid term (including where the renewal 'deems' a new mortgage date) is exercising choice rather than effecting an unenforceable waiver; where a renewal validly 'deems' a new date and its term does not exceed five years, the mortgagor cannot prepay until the end of that renewal term, whereas any clause purporting to permanently relinquish the statutory right would be unenforceable.

Court Disposition

Appeal allowed; order of the Manitoba Court of Appeal set aside; order of Kroft J. dismissing respondent's application restored.

Orders

  • Appeal allowed
  • Order of the Court of Appeal of Manitoba set aside