Sale proceeds from a foreclosure proceeding were paid into Court. The Defendants appealed an Order directing that money held in Court be paid out to the Respondent, Cummings, who claimed entitlement to a debt pursuant to a promissory note and had registered an encumbrance against the foreclosed lands. The real issue on Appeal was whether Cummings’ Claim was defeated by the provisions of the Limitations Act, RSA 2000, c L-12 at the date that the Plaintiff commenced foreclosure proceedings. When the Plaintiff, who was the first mortgagee, commenced foreclosure proceedings, it did not name Cummings as a subsequent encumbrancer, pursuant to Rule 3.77. The expectation was that once foreclosure was complete, if there was a surplus of funds after payment of the mortgage, the other claimants, including Cummings, would be required to prove their Claims.

The Court stated that, if foreclosure proceedings have been commenced prior to the expiry of the limitations period for the subsequent encumbrancer to have commenced its own proceeding, the subsequent encumbrancer may then “ride the coattails” of the foreclosure Action. The Court held that the foreclosure Action was commenced in time, and there was no need for Cummings to have commenced his own Action. The Appeal was dismissed.