The borrowers went into default but six months later, brought their mortgage arrears up to date. Pursuant to an acceleration clause in the mortgage, a default made the entire principal owing to the bank.
Before the arrears were brought up to date, the bank reported their failure to pay the total amount due to a credit-reporting agency, and this has since prevented the brothers from refinancing.
After rectification of the arrears, the bank refused to notify the credit-reporting agency that the principal was no longer owing and continues to claim possession. This was done even though the bank manager accepted the payment of arrears and accepted that the total amount was no longer owing.
The bank’s position appears to be that it will not inform credit-reporting agency that the total amount of the principal is no longer owing unless and until it is repaid in full. The borrowers applied to the court for an order that the bank notify the credit-reporting agency that monies were no longer owing.
The court found that despite its evident practical appeal, it did not have jurisdiction on an interlocutory application to decide whether it was unconscionable of the bank to insist that the full amount was owing and to refuse to notify the credit-reporting agency that the full amount was no longer owing. Furthermore, such relief would effectively determine the proceedings on a final basis. The court could only order the bank to notify the credit-reporting agency that the amount was no longer owing if the court determined that it was no longer owing, or if it determined that it would be unconscionable for the bank to insist that it was. If the relief were granted, then it would difficult to see on what basis the bank could obtain an order for possession since it would be relying on a breach which had been remedied in respect of an account that was no longer in default.
The court declined the relief sought but ordered the costs of the motion be costs in the cause, notwithstanding the terms of the mortgage which required the borrowers to pay the bank’s costs in any event. The court noted that if the borrowers succeed at final hearing on the arguments they have made as to unconscionability in support of their motion, it is just that the bank bear the costs of the motion, notwithstanding that they have failed on their motion.