Judge rules against bank in ‘unjust’ property foreclosure

Toronto-Dominion Bank demanded more than $16,000 for $10,000 loan

A decision by the Nova Scotia Supreme Court has saved a Scotchtown couple $10,000 after a bank demanded a deficiency judgment of more than $16,000.

Justice Gerald Moir ruled that the Toronto-Dominion Bank will only receive $6,877 from Shawn and Margaret MacLean in relation to a property purchased by the couple in 2003 on Mahon Street in New Waterford.

“There is no evidence that any thought was given by the bank to the efficacy or the efficiency of using foreclosures and sale to enforce a small loan against a vacant lot in a very depressed community,” Moir ruled in a judgment initially delivered in June but officially released Wednesday.

He said the extraordinary result and the choice of an expensive remedy to enforce a small loan undermines the justice and reasonableness of a conventional calculation of the debt owed by the MacLeans.

The MacLeans borrowed $18,000 to purchase the property and had paid it down to $10,000 before they fell into default. In response, the bank sued for foreclosure and made a claim for a deficiency judgment.

The MacLeans attempted to submit a bank draft for $10,495 but it was rejected by the bank, which claimed the amount would only bring the mortgage up to date and the couple would have to pay $18,671 for complete redemption.

The bank purchased the property at the foreclosure auction in 2015 for $1,150 and resold the property in 2016 for $4,000 to a realtor and submitted a claim to the MacLeans for $16,967.

There was a building on the property at the time of purchase but it was later destroyed by fire and MacLeans had no insurance.

In his decision, Moir said the court needs to be concerned about the expense of the foreclosure and sale process.

“I find that choice of remedy was unjust because it put the MacLeans right of redemption out of reach,” he said.

“It was unreasonable because it exposed the bank to losses, and burdened the MacLeans with liability for useless expenses without any evidence of an assessment being made when the remedy was chosen,” he concluded.