Court File and Parties

Court File No.: CV-23-0193-00 Date: 2025-11-21

Superior Court of Justice - Ontario

RE: Browns Clearwater West Lodge Inc., Plaintiff by Counterclaim

v.

Caroline Manon Labonte and the Estate of Barry William Brown, Defendants by Counterclaim

HEARD: November 20, 2025

BEFORE: Fitzpatrick J.

COUNSEL:

M. Cupello, for the Moving Party Carolle Manon Labonte ("Labonte")

J. Kirk, for the Responding Parties ("Browns'")

Endorsement on Motion for Order for Interim Mortgage Payments

[1] This is a commercial mortgage matter that I am case managing. I was appointed case management judge April 8, 2024. The matter is subject to a timetable. The timetable provides the matter will tried on the running list commencing September 8, 2026.

[2] As an aside, at the commencement of the motion, counsel were offered trial dates in January or February 2026. Counsel are not available to try the case on those dates. Apparently, there are still outstanding examinations to be conducted.

[3] I have written two substantive interim decisions in this matter. In addition, there was an initial interim decision given by Fregeau J. ( Browns' Clearwater West Lodge Inc. v. Labonte et al 2023 ONSC 5337 (September 22, 2023)). Those decisions outlined the background of the matter. I do not propose to restate the background facts. This is a commercial mortgage matter. Carol Labonte ("Labonte") is the mortgagee. Browns' Clearwater West Lodge Inc., 539644 Ontario Inc., Brian Walley and Aniela Jane Hannaford are defending the action to enforce the mortgage (all defendant parties hereinafter collectively referred to as "Browns'). At issue is a vendor take back mortgage of approximately 2.7 million dollars on a purchase of a tourist lodge operation for 3.1 million dollars that closed in August 2021. The mortgage contemplated a partial payout of $500,000.00 in June 2024. The monthly mortgage payments were $12,000.00 blended principal and interest. All the terms of the mortgage were particularized at Schedule M of the Share Purchase agreement between the parties.

[4] There is no issue that the mortgage at issue is valid. No allegation of fraud is made against Labonte. I made an interim order on June 7, 2024, prohibiting Labonte from enforcing a notice of sale made in April 2024 and ordering Browns' to make certain interim without prejudice payments against the mortgage debt. That order was complied with by Browns'.

[5] Labonte also brought a summary judgment motion which she converted to a partial summary judgment motion when the motion was heard in March 2025. I dismissed the motion for partial summary judgment on March 11, 2025. I granted leave to bring this motion on August 5, 2025, when the timetable was agreed to.

[6] Today, Labonte seeks an order that Browns' pay $15,000.00 per month commencing August 1, 2025 until trial. Browns' submit the motion should be dismissed as it is an attempt to relitigate the finding on the motion for summary judgment. Both parties indicate that they would suffer undue economic hardship if the motion does not go their way.

[7] I am ordering that Browns' Clearwater West Lodge Inc., 539644 Ontario Inc., Brian Walley and Aniela Jane Hannaford or any of them pay to Labonte $12,000.00 per month commencing February 1, 2026 and continuing until trial. Any of these payments are without prejudice to positions they wish to take at trial.

[8] I note that while the trial judge may find that the set off amount would overtake any amount that had to be paid on an ongoing basis, Browns' are still looking at being contractually obligated to pay a substantial amount of principal on the mortgage debt following a trial. The payment of June 2024 has not been made.

[9] In my view, to the extent that equity can have any bearing on the obligation to make ongoing payments on a valid commercial mortgage, I have already found that Labonte is suffering significant economic consequences from Browns' failure to make ongoing monthly mortgage payments.

[10] In the most recent affidavit material filed by Browns' on this motion, Aniela Jane Hannaford deposes as to the financial hardships that would be experienced if the interim order was granted. However, the affidavit material contains no up to date financial information as to the operation of the tourist business. The most recent financial information available to the Court is from October 31, 2023 which shows an operating deficit of $206,007. However, of that deficit amount there is a retained earnings deficit of $201,237. On a strict revenue to expenses basis the net loss shown is $4,770.

[11] I am therefore left guessing as to on what basis Ms. Hannaford asserts that currently "any requirement to make additional payments before trial would endanger not only the continued operation of Browns' Clearwater, but also our own personal solvency". I have no independent financial information in which to assess that statement. I would have expected it if the kind of open ended relief being sought by Browns' was to be seriously considered.

[12] This is a commercial matter. The mortgage at issue is valid. Some delay clearly has occurred in this matter because of Labonte pursuing and then abandoning in part a motion for summary judgment. However, contractual obligations in commercial contracts are not to be lightly ignored.

[13] In my view, it is appropriate for Browns' to make payments of $12,000.00 on the mortgage commencing in February, 2026. I see no commercial basis to relieve Browns' any further on an interim basis from the basics of the vendor take back mortgage agreement they made four years ago. A goal of any interim adjudication is to encourage the parties to resolve their matter. As case management judge I am exercising my discretion and trying that again here. Both parties need to take a long hard look at the economic realities of this litigation and decide if after all of this, it makes senses to take a commercially reasonable look at their respective positions and govern themselves accordingly.

[14] In terms of costs, absent any Rule 49 compliant offers to settle by either party that would have seen payments at or above $12,000.00 commence on or before February 1, 2026, I would not be inclined to order any costs for this motion. The parties need to get on with this. If such valid Rule 49 compliant offers were made, I invite counsel to submit them to my judicial assistant on or before November 28, 2025. I will then schedule a brief attendance to entertain oral costs submissions.

Otherwise order to go for interim payments on a without prejudice basis commencing February 1, 2026 as per the above reasons.

"original signed by" The Hon. Mr. Justice F.B. Fitzpatrick

Release Date: November 21, 2025