Alberta court disallows lender’s mortgage fees, cites misconduct

Of the $364,042.25 the lender claimed in its Statement of Secured Indebtedness, the court disallowed $6,895.81. The disallowed amounts included a $5,364.98 charge tied to a slice of the lender’s 2026 commercial mortgage impairment insurance premium, a $500 default fee, and $750 in late fees billed at $150 each across five instances.

The insurance charge came apart under scrutiny, the court found, because it stemmed from an ongoing corporate policy rather than one specific to the property, and the lender could not show that two underlying invoices – for $20,250 and $3,774 – had actually been paid by the company. The default and late fees failed for a different reason: Alberta’s Consumer Protection Act and the federal Interest Act both bar penalty-style charges on mortgage arrears that exceed compensation for an actual cost, and the lender’s fees were not tied to any specific expense.

The court also faulted how the lender presented its case. Its Statement of Secured Indebtedness was, in the judge’s words, materially inaccurate, and its Affidavit of Default lacked the particulars needed to support the disputed charges, including any account ledger showing the loan’s payment history. The lender’s mortgage renewal agreements, the ruling noted, listed the disputed fees in a way that suggested they were authorized under the province’s consumer protection law, when they were not.

The judge wrote that the lender’s conduct “cumulatively constitutes misconduct in these foreclosure proceedings.”

The court has ordered the lender to file a supplemental Affidavit of Default, including a two-year account ledger, with the unenforceable charges and any related interest removed, before returning to court for a further hearing on the redemption order. At that hearing, the judge will address costs and potential remedies under the Consumer Protection Act, including statutory damages capped at the lesser of $500 or five percent of the outstanding balance.