Ontario court backs lender’s right to accelerate future interest after default
The borrower defaulted. On August 22, 2024, CEFL sent default notices and demanded $672,417.20 under the loan’s acceleration clause – the balance of principal plus all unaccrued future interest.
Then things got messy. CEFL tried to seize the bus and could not find it. When asked at his home, one of the directors told the lender the search would be a “wild goose chase.” A Canada-wide vehicle database search eventually turned up the bus in Alberta, where the borrower had secretly sold it to a third party for $500,000, in breach of the loan agreement. Under pressure from the buyer, the borrower remitted the sale proceeds on September 17, 2024. That covered the outstanding principal and accrued interest up to that date – but not the future interest CEFL had already accelerated.
The borrower argued the contract did not allow acceleration of future interest and that section 17 of Ontario’s Mortgages Act barred the claim. A Superior Court judge disagreed in September 2025, ordering the borrower to pay the future interest, $32,701.96 in enforcement costs, and a $12,571.25 WiseCap Broker Fee paid to the broker who arranged the loan.
Justice D.A. Wilson, writing for the appeal panel, upheld that ruling on all three grounds.
On the contract, she found the acceleration clause plainly allowed the lender to accelerate future interest. “Indebtedness” was defined in the agreement to include “any and all obligations, indebtedness and liability of the Borrower to the Lender (including interest thereon) present or future.”
