An Ontario Superior Court judge has ruled that a lender, having settled a mortgage enforcement action through a consent judgment that fixed the amount of legal costs, cannot later demand payment for additional legal fees incurred before that settlement was reached1. The decision, delivered on September 10, 2025, underscores the finality of court-approved settlements and clarifies the amounts a borrower must pay to discharge a mortgage after litigation has been resolved.
The case involved a dispute between Amur Capital Fund Inc., the lender, and borrowers Graziella Stach and Serge Ayotte. The borrowers had successfully arranged refinancing to pay out their mortgage debt following a court action but were presented with a payout statement from Amur Capital that included nearly $20,000 in additional legal fees and a $7,500 “holdback” amount not contemplated in the judgment that had settled the lawsuit just weeks earlier.
The legal journey began after a mortgage for a principal sum of $1,488,000, secured against three properties owned by Ms. Stach and guaranteed by Mr. Ayotte, matured on May 15, 2023. An attempt to renew the mortgage failed, and Amur Capital subsequently demanded full payment. When the payment was not made, the lender issued a notice of sale on July 28, 2023, initiating the formal enforcement process.
The conflict escalated when Amur Capital commenced a court action on October 3, 2024, seeking payment of over $1.7 million, possession of the properties, and importantly, “such further monies as may become due and owing pursuant to the covenants contained in the mortgage.” In response, the borrowers filed a statement of defence and a counterclaim on October 30, 2024. They denied defaulting on the mortgage, accused the lender of acting in bad faith during mediation, and alleged the imposition of inappropriate penalties. Amur Capital defended against the counterclaim, asserting it was within its rights under the mortgage agreement.
The matter was set to be decided through a summary judgment motion brought by Amur Capital, scheduled for March 28, 2025. In its motion, the lender asked the court for all amounts owing under the mortgage, possession of the properties, and the costs of both the action and the motion. However, on the day of the hearing, the parties informed the court they had reached a resolution. A draft judgment was filed on consent, which was then formally issued by Justice A.D. Kurke on April 1, 2025.
This consent judgment was specific. It ordered the borrowers to pay Amur Capital a total of $1,771,727.21. It also explicitly addressed the issue of legal costs, stating that the “costs of the action and motion” were “fixed in the sum of $7,292.80 inclusive of H.S.T. and disbursements.” The judgment also gave the borrowers a grace period, stipulating that any writ of possession to evict them could not be enforced before June 6, 2025.
With the judgment in hand, the borrowers worked to secure new financing. On April 28, 2025, their lawyer informed Amur Capital that they had arranged the necessary funds and requested a payout statement to complete the transaction as soon as possible. On May 6, Amur Capital provided the statement, but the total was not what the borrowers expected. Instead of the judgment amount plus the fixed costs, the statement demanded $1,825,834.49. It included the outstanding loan balance, interest, various administrative and discharge fees, a “holdback” of $7,500, and a line item for legal costs and disbursements totaling $26,324.43.
Confused by the discrepancy, the borrowers’ counsel engaged in a series of communications with the lender’s counsel. After requesting a detailed breakdown of the legal fees, they received a 22 page document on June 20, 2025. This document detailed all legal work performed for Amur Capital from June 13, 2023, nearly a year before the judgment, up to June 13, 2025. The total came to $27,228.43. Faced with this impasse, the borrowers brought a new motion before the court, asking a judge to compel Amur Capital to provide a payout statement that complied with the terms of the consent judgment they had all agreed to.
Before Madam Justice S.K. Stothart, the arguments were laid bare. The borrowers contended that the consent judgment was a complete and final adjudication of their debt. The figure of $1,771,727.21 settled the principal, interest, and any other fees owed up to that date, and the separate figure of $7,292.80 settled the entire issue of pre-judgment legal costs. They agreed they were responsible for reasonable costs incurred by the lender after the judgment to facilitate the discharge, but not for costs that were already dealt with in the settlement.
Amur Capital argued that its rights under the original mortgage contract survived the judgment. It pointed to a “non-merger” clause in the mortgage terms, which it claimed allowed it to continue to enforce contractual clauses separately from the judgment. This included a term entitling it to all legal costs incurred in enforcing the mortgage on a “solicitor and its own client” basis. The lender argued the fixed costs in the judgment were simply the court-ordered costs, and it was still contractually entitled to the full remainder of its legal bill. It also maintained the $7,500 holdback was necessary to cover any potential future costs between providing the statement and receiving payment.
Justice Stothart sided with the borrowers. She found a critical distinction between this case, which was resolved by a consent judgment following a contested action, and the cases cited by the lender, which involved default judgments where a borrower did not defend the action. In this instance, she noted, the parties had a live dispute, complete with a claim and a counterclaim. When they settled, they resolved all those outstanding issues.
The judge reasoned that the purpose of a settlement is to achieve finality. When Amur Capital agreed to a judgment that fixed the costs of the action and motion at $7,292.80, it was reasonable to conclude that this amount represented the full and final agreement on all legal costs incurred up to that point. “While this amount does not cover all the legal costs incurred by the plaintiff,” Justice Stothart wrote, “it is clear that the parties reached an agreement to fix the costs of the action by way of a settlement that was incorporated in the consent judgment.” She added that allowing the lender to claim more after the fact “would run contrary to the purpose and spirit of settlement.”
Regarding the demand for a $7,500 holdback, the judge found no basis for it. She noted that the lender was not holding back its own funds but was demanding an extra payment from the borrowers above and beyond the full amount owed. Once the borrowers paid the judgment, interest, and reasonable post-judgment costs, they were entitled to a discharge of the mortgage.
Ultimately, Justice Stothart concluded that Amur Capital was bound by the terms of the judgment it had consented to. She ordered the lender to provide a new, corrected payout statement within ten days. This statement was to include only the amount from the consent judgment, post-judgment interest, and any reasonable fees associated with discharging the mortgage, which she fixed at $4,860 for the period following the judgment. The judge also extended the stay on any eviction until September 29, 2025, to allow the borrowers time to make the final payment and close the chapter on the dispute.
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