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Digest Of The Week | 58 Cardill Inc. v. Rathcliffe Holdings Limited

Mortgagor retained contractor to build student residence on property — Mortgagee provided mortgage financing to mortgagor in amount of $11,700,000 — When four claims for lien were registered against property, mortgagee delivered notice of default under mortgage — Mortgagee appointed receiver-manager over construction project and property with power to sell property — Receiver sold property for amount of $14,390,000 — Liens were paid and mortgage discharged as part of conveyance of property — Amount of $351,000 was assessed and withheld by mortgagee as additional three-month interest charge that was supplementary to mortgage interest calculated to date of closing — Mortgagor's application for determination that mortgagee was not entitled to additional three-month interest charge was granted — Trial judge found three-month interest provision in mortgage was activated when mortgagor sought to require mortgagee to accept payment of amounts owed under mortgage in exchange for discharge of mortgage obligation — Trial judge found it was mischaracterization of role of receiver privately appointed by mortgagee to state that steps taken by receiver to realize maximum recovery of property for benefit of mortgagee were actually taken by receiver on behalf of mortgagor for purpose of requesting pay-out of mortgage — Trial judge found there was no entitlement on part of mortgagee to three-month interest charge — Mortgagee appealed on issue of interest — Appeal dismissed — Language of interest provision indicated that it was only when chargor sought to require chargee to accept payment of principal amount that chargor agreed either to pay three months' interest or give three months' notice — Trial judge did not misunderstand jurisprudence regarding agency — Sale agreement with third party purchaser required conveyance of title to purchaser free and clear of all encumbrances, including mortgage, and receiver was required to discharge mortgage to close sale.
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