This view may shock some, as it suggests that a RSTA tax liability has priority over all security interests, even if the security is taken before the tax debt arises. Though TD Bank took its money without any claim by MOF, the tax debtor bought the property after the RSTA debt arose; so TD's mortgage must have been placed after the Crown's deemed trust (though the judge's reasons don't say exactly when TD took its mortgage). TD may have escaped only because the balance remaining after TD's debt still covered Ontario's claim. After selling the property under its mortgage power of sale, TD paid the balance, $10,000, into Court and the issue was whether the second mortgagee or the MOF was entitled to the $10,000 in Court.
Justice Coats essential reasons were these:
" Further, the Ontario Superior Court of Justice and the Ontario Court of Appeal have ruled that the aforementioned deemed trust provisions in tax legislation apply to give priority to the Canada Revenue Agency over mortgagees. In MCAP Service Corp. v. Hunter,  O.J. No. 5574 (Ont. S.C.), the plaintiff mortgagee brought a summary judgment motion against the mortgagor in a mortgage action. The issue was whether the non-remittance of goods and services tax under the Excise Tax Act and source deductions under the Income Tax Act by the mortgagor was a default of the mortgage. In summarily finding that the failure to remit was a default under the terms of the mortgage, the court had to first find that the deemed trust provisions in the tax legislation gave priority over the mortgagee, who held a registered mortgage. After reviewing the relevant aforementioned sections of the Excise Tax Act and the Income Tax Act, the court ruled the deemed trust provisions gave priority to the Canada Revenue Agency over the mortgagee. At para. 10, Justice Gordon found as follows:
"Accordingly, by virtue of this legislation, Canada Revenue Agency does have a priority claim against the real property of the defendant to the extent of the amount owing to it on 5 December 2002. The plaintiff, therefore, did not obtain a first charge upon registration of the mortgage.
" The court in MCAP Service Corp. further references the deemed trust priority over the mortgagee in paragraphs 19, 22 and 23. The priority claim was limited to the amount of tax arrears at the date the mortgage was granted (December 5, 2002). The court’s limitation in the amount of the deemed trust priority was pursuant to section 2201 of the Income Tax Regulations and the parallel section 2011-55 of the Security Interest (GST/HST) Regulations. There are no similarly prescribed security interests under the RSTA that would limit the amounts to arrears owing at the date of the granting of the mortgage. Further, in the matter before this court, the retail sales tax arrears arose prior to the registration of the mortgage in favour of Ms. Sukhdeo, as it did in MCAP Service Corp.
" The granting of the motion for summary judgment by the Superior Court of Justice in MCAP Service Corp. was appealed to the Court of Appeal. Although the Court of Appeal at MCAP Service Corp. v. Hunter,  O.J. No. 429 (Ont. C.A.) reversed the decision of the Superior Court in granting summary judgment and ruled that non-remittance of tax being grounds for default was a genuine issue for trial, the Court of Appeal clearly found that the deemed trust provisions gave priority over the interest of the mortgagee at para. 3 as follows:
"Applicable federal legislation deem the monies the appellant had failed to remit to the CRA to be held in trust pending payment to Her Majesty, and give the Crown a beneficial right in all of his property, to the extent of the unremitted amount, with priority over any security interest. There are exceptions for prescribed security interests that are not in issue in this case.
" For the above reasons, I conclude that the deemed trust provisions in the RSTA, give priority to tax owing under that Act over all other security interests involved in this matter, including Ms. Sukhdeo’s interest as a mortgagee."
See Toronto-Dominion Bank v. Comrie and Comrie, (2014 ONSC Coats)