Background
In December 2007, Ana Maritza Reina Flores borrowed $112,909.87 from CIBC Mortgages Inc., secured by a mortgage on her home. The mortgage was renewed several times over the years, with the final renewal commencing June 23, 2023 and maturing December 15, 2023. Before maturity, Flores had fallen behind on payments, and when the mortgage came due CIBC declined to renew. CIBC filed a statement of claim in January 2024.
At the summary judgment hearing, the motions judge found no contractual obligation requiring CIBC to renew the mortgage, rejected Flores’s arguments that the mortgage was in good standing, and granted judgment for $119,256.09 plus costs of $23,350.78 on a substantial indemnity basis — the latter authorized by article 10.3 of the mortgage agreement — together with an order for immediate vacant possession. Funds Flores attempted to tender after maturity were returned to her by respondent’s counsel and ultimately brought into court.
Flores appealed on five grounds: (1) lack of jurisdiction because no notice of motion for summary judgment had been formally filed; (2) procedural unfairness; (3) incorrect application of the summary judgment test; (4) failure to comply with evidentiary requirements in foreclosure proceedings; and (5) insufficient mortgage documentation to support the possession order.
The Court’s Holding
The Court of Appeal dismissed the appeal. On the procedural grounds, the Court found that Flores had ample notice of the motion — the summary judgment process had been structured through two pre-trial conferences — and that the mere failure to file the written notice of motion before the hearing was a correctable irregularity under rule 2.01(1) of the King’s Bench Rules. The judge had properly allowed the matter to proceed and treated the notice as filed nunc pro tunc. No procedural unfairness or injustice was demonstrated.
On grounds three through five, the Court found no reversible error. The motions judge correctly applied the summary judgment test. Flores’s arguments amounted to a continued refusal to accept that she had defaulted, to accept the amount owing, and to accept that CIBC bore no contractual obligation to renew the mortgage upon maturity in December 2023. The Court affirmed costs on a substantial indemnity basis pursuant to the mortgage agreement.
The Court added a pointed observation about the quality of Flores’s appellate materials: the cases cited in her factum had either been hallucinated or misrepresented the legal propositions attributed to them — a problem the Court attributed to the apparent use of artificial intelligence. The Court stated plainly that arguments based on non-existent or irrelevant case law are unacceptable, and noted that CIBC wasted significant time and effort attempting to verify the fictitious citations.
Key Takeaways
- A lender has no obligation to renew a residential mortgage upon maturity absent an express contractual term requiring renewal; a borrower’s payment history does not create such an obligation.
- Procedural irregularities — such as filing a notice of motion after the hearing — will not void a summary judgment order where the opposing party had full notice, disclosure, and an opportunity to respond, and the court corrects the irregularity under the applicable curative rule.
- Costs on a substantial indemnity basis are enforceable where the mortgage agreement expressly provides for that standard.
- Courts will not tolerate factums containing AI-generated citations to non-existent cases; counsel and self-represented litigants alike bear responsibility for verifying every authority they submit.
Why It Matters
This decision is a straightforward application of mortgage enforcement principles, but its significance for practitioners lies in the Court of Appeal’s explicit rebuke of AI-hallucinated legal citations. The Court noted that CIBC expended needless resources trying to verify cases that did not exist or did not stand for the propositions claimed — a concrete illustration of the harm fictitious citations cause to opposing parties and courts alike. Manitoba’s Court of Appeal joins a growing list of Canadian and international courts that have publicly condemned the submission of unverified AI-generated legal research.
For mortgage lenders and borrowers, the decision confirms that renewal is a discretionary commercial decision unless the mortgage instrument expressly provides otherwise, and that a matured mortgage in arrears may be enforced by summary judgment with costs on a substantial indemnity scale where the contract so provides.