The Defendants owned a series of condominiums in an apartment complex. The condominiums were demolished due to structural defects. The Plaintiff mortgagee sued for damages equal to the amount left owing under the mortgage for breach of a covenant to repair, and for the tort of waste. The Defendants did not defend and were noted in default. The Plaintiff sought judgment for the outstanding mortgage balance.

Master Schlosser observed that, procedurally, if, in a foreclosure Action, the mortgagors are exposed to personal liability Rule 6.5(3) requires notice. This is so even if the mortgagors have been noted in default. If the proceeding is not for foreclosure, no notice is required pursuant to Rule 3.37(1).

Master Schlosser was not satisfied on the record that the bank was able to show that anything the Defendants did as individual condo owners caused the structural failure. Master Schlosser made particular note of the fact that the Defendants were required to leave after a structural engineering report noted serious issues. Master Schlosser went on to note that this report was not in evidence, and it was unclear if the building ultimately had to be demolished because of the common areas or the individual condo units.

Some of the evidence adduced by the Plaintiff was hearsay which was contrary to Rule 13.18, but it raised enough of an issue about a breach of the Defendants’ covenant to repair for Master Schlosser to order that the Plaintiff seek additional evidence. Master Schlosser ordered that the Application be adjourned pursuant to Rule 3.37(3)(d) to gather additional evidence on the cause of the structural collapse.