Executive Summary: Key Legal and Evidentiary Issues

• Dispute arose over whether the plaintiff could claim additional legal fees and a holdback amount beyond those included in a consent judgment resolving a mortgage enforcement action.

• Defendants argued that all legal fees and costs incurred prior to the judgment were included in the consent judgment and objected to additional fees and a holdback not provided for in the judgment.

• Plaintiff relied on the terms of the Charge, including standard charge terms and a non-merger clause, to justify its claim for additional legal costs and a holdback.

• The court determined that all legal fees and disbursements related to enforcement work up to March 28, 2025, were adjudicated in the consent judgment and that the plaintiff had not established a basis for a holdback as a precondition to discharge the mortgage.

• Only reasonable post-judgment costs and fees associated with discharging the mortgage could be included in the payout statement.

• The plaintiff was ordered to provide a compliant payout statement, and the period for enforcement of any writ of possession was extended.

Background and mortgage dispute

The defendant Graziella Stach granted a Charge over three properties to the plaintiff, Amur Capital Fund Inc., securing the principal sum of $1,488,000. Serge Ayotte guaranteed the loan. The mortgage matured on May 15, 2023. The plaintiff sent a renewal agreement, stating that if the renewal documentation was not received by May 15, and if the mortgage was not renewed, it would become due and payable. The plaintiff did not receive the renewal documents in time and made demands for payment to Ms. Stach on June 13 and to Mr. Ayotte on June 16. On June 22, 2023, the defendants provided the signed renewal documents, but by then the plaintiff was no longer prepared to renew the mortgage. On July 28, the plaintiff issued and served a notice of sale.

On October 3, 2024, the plaintiff commenced an action by way of statement of claim, seeking payment of $1,737,706 due under the mortgage, “such further monies as may become due and owing pursuant to the covenants contained in the mortgage,” possession of the mortgaged properties, pre-judgment interest at 8.5% from October 4, 2024, and post-judgment interest at 8.5% per annum. The defendants responded on October 30, 2024, denying default, asserting the plaintiff refused to renegotiate, that penalties were inappropriate, and that the plaintiff acted in bad faith during mediation. The defendants counterclaimed for damages, repeating allegations of bad faith and unlawful penalties.

The plaintiff replied that it was under no obligation to renegotiate, acted in good faith, charged interest and fees in accordance with the mortgage and the Interest Act, and participated in mediation in good faith.

On December 20, 2024, the plaintiff served and filed a notice of motion for summary judgment, seeking all amounts owing under the mortgage, possession, leave to issue a writ of possession, and costs.

Settlement and consent judgment

The summary judgment motion was scheduled for March 28, 2025. On that day, the parties advised the court they had negotiated a resolution. Justice A.D. Kurke endorsed the matter: “Judgment to go in the form of the draft filed on consent.” On April 1, 2025, Justice Kurke issued the judgment requiring the defendants to pay the plaintiff $1,771,727.21, with post-judgment interest at 8.5% per annum, deliver the properties, and provided that any writ of possession not be enforced before June 6, 2025. The costs of the action and motion were fixed at $7,292.80 inclusive of H.S.T. and disbursements, plus post-judgment interest at 5% per annum.

Events following the judgment

On April 28, 2025, the defendants advised the plaintiff they had arranged alternative financing and requested a payout statement for May 2, 2025. On May 6, 2025, the plaintiff provided a payout statement including: outstanding loan balance $1,517,093.23, interest to May 9, 2025 of $270,899.23, administration fee $2,500, discharge fee $175, property management fee $361.60, legal costs and disbursements $26,324.43, discharge preparation and registration fee $981, and a holdback of $7,500, for a total payout of $1,825,834.49.

On May 14, 2025, the plaintiff advised the payout statement had expired and that they had instructions to proceed with legal action. The defendants responded that no action could be taken until June 6, and that they expected to have funds soon, proceeding on the basis of the May 6 statement plus per diem. The plaintiff confirmed the per diem and requested confirmation of payment.

On May 29, the defendants requested the payout statement be reviewed. On May 30, the plaintiff provided an updated payout statement with adjusted interest. On June 3, the defendants requested a breakdown of the legal costs. The plaintiff provided a 22-page breakdown on June 20, 2025, showing legal fees and disbursements from June 13, 2023, totaling $27,228.43. The defendants then brought this motion.

Court’s analysis of policy terms and legal arguments

The plaintiff relied on the standard charge terms, including a non-merger clause, to claim all costs, charges, and expenses incurred in taking, recovering, and keeping possession of the charged property, including solicitor’s charges “as between solicitor and its own client.” The plaintiff cited Benson v. Gibson, Violi v. McLeod, and NRD Management Services Ltd. v. Dorothy Litwin to support its position.

The court distinguished these cases, noting that in this case, the action was settled by consent judgment, not default judgment, and that the judgment included all amounts owed under the mortgage, including legal fees and costs up to the date of settlement. The court found that the consent judgment amount, which exceeded the principal owing at maturity by $254,634.21, reasonably included interest, costs, and fees up to that date. The costs of the action and motion were specifically fixed at $7,292.80. The court held that the judgment was comprehensive and final as to pre-judgment costs.

The court found no provision in the Charge permitting a holdback amount as a precondition to discharge the mortgage. The court stated that once the defendants paid the judgment amount, post-judgment interest, and reasonable fees associated with discharging the mortgage, they were entitled to have the mortgage discharged.

Outcome and orders

The court ordered the plaintiff to provide a mortgage payout statement within 10 days, setting out the amount owing pursuant to the Order of Justice Kurke, post-judgment interest at the rate set out in the judgment, and reasonable fees associated with discharging the mortgage. Payment of these amounts would fully address any amounts owed. If the parties could not agree on reasonable fees, they could return to court for a determination. The period during which any writ of possession would not be enforced was extended to September 29, 2025, to permit the exchange of the payout statement and payment. If the parties could not agree on costs related to this motion, written submissions were to be provided as directed by the court. The successful party in this motion was the defendants, who were not required to pay additional pre-judgment legal fees or a holdback; the amount awarded is the sum fixed in the consent judgment plus reasonable post-judgment costs, with no additional pre-judgment legal fees or holdback permitted.