Legal Blog:

Deemed Provisions in Order / Conversion

2668602 Ontario Inc. v. GWL Realty Advisors Inc. 2026 Ont C.A.

Purchaser bought warehouse fixtures, including extensive racking, during insolvency proceedings but failed to remove them by the deadline after the lease disclaimer. The insolvency order deemed that if purchaser did not do so, purchaser would be deemed to have abandoned them. Purchaser did nothing to remove the racking and the landlord ultimately sold it for $45,000. 18 months later, purchaser sued the landlord for conversion. The Court of Appeal held that the deemed abandonment, in the context of the case, could not be rebutted and, regardless, the facts did not actual rebut the abandonment. Although not applicable, the Court noted that conversion damages would have been the fair market value of the racking at the date of the conversion.

Interest Act s. 8

Rabinowitz v. 2528061 Ontario Inc. 2026 Ont C.A.

Purchaser sought specific performance of a failed commercial real estate transaction and repayment of a six‑month mortgage that vendor had granted to secure purchaser’s deposit. Interest was 0% to the closing date and 12% on closing and the mortgage proceeds were to be applied to the purchase price. The trial judge found vendor repudiated the agreement but, holding that the property was not unique and that damages would adequately compensate purchaser, dismissed purchaser’s specific‑performance claim. The Court of Appeal agreed and refused purchaser’s attempt to amend its pleadings to claim for damages. The judge ordered vendor to repay the mortgage but refused to order the 12% contractual interest as violating s. 8 of the Interest Act. The Court of Appeal restored the 12% contractual interest, holding that the interest rate increase was not a consequence of the breach of the agreement and that s. 8 did not apply.

Project Manager’s Civil Fraud

1995636 Ontario Inc. v. 5010729 Ontario Inc. 2026 Ont SCJ (Div Ct)

Project manager provided development‑management services for a housing project and filed a $450,000 construction lien after the owner terminated the contract. The owner found that project manager was building a duplex rather than 13 units as represented. The trial judge rejected project manager’s evidence as not credible, found intentional deception, held that project manager was entitled to no more money than the owner had already paid, discharged the lien, and granted damages on the counterclaim. The Divisional Court upheld the result.

Contingency Agreement

Leduc v. O’Brien Estate 2026 Ont CA

Client settled a medical‑negligence action for a substantial sum. Lawyers sought approval of fees under a contingency fee agreement. The motion judge approved the settlement, but reduced the fee after finding the agreement unfair when made. The lawyers’ appealed, arguing the agreement was understood and voluntarily entered into. The Court of Appeal held that the agreement was unfair when made because the clients were vulnerable and the agreement did not comply with the contingency rules under the Solicitor’s Act.

Secondary Evidence

Bank of Montreal v. Ieradi 2025 Ont SCJ

Bank sought repayment of a line of credit, asserting that the defendant personally entered into and used the facility. The bank had lost the signed agreement. The dispute’s outcome depended on secondary evidence, including cheques, statements, and usage patterns. The court found the secondary evidence overwhelmingly indicated a personal agreement.

Insurance Interpretation

Emond v. Trillium Mutual Insurance Co 2026 SCC

Insureds’ house was destroyed in a flood. Rebuilding required extra compliance‑related costs that conservation authority imposed. The insurer denied coverage based on an exclusion for increased costs due to “any law.” The issue became whether the exclusion in the base policy carried into the endorsement. The Court held that endorsements operate within the whole contract, the endorsement is carried back into the policy, and the exclusion applies to it.

Fraudulent Conveyance/Preference

Crowe Soberman Inc. v Noir Property Management Ltd. 2025 Ont SCJ

Mortgagee claimed secured status through a mortgage granted by an insolvent mortgagor for no seeming consideration. The judge held that the mortgage was both a fraudulent conveyance and a fraudulent preference. It was not made in good faith, and the mortgagee knew of the mortgagor’s financial difficulties at the time.

Part Performance

273 Ontario v. 238 Ontario 2025 Ont CA

The vendor sought to enforce an oral land‑sale agreement and had taken extensive steps toward closing, including preparing documents and tendering funds; the purchaser refused to close despite participating in the closing process. The trial judge found that part performance rendered the oral agreement enforceable, notwithstanding the Statute of Frauds. The Court of Appeal agreed that the vendor’s extensive closing activities amounted to detrimental reliance, satisfying both the evidentiary and equitable components of part performance.

Stay of Order

Kakoutis v. BNS 2026 Ont CA

Mortgagors sought a stay of an eviction order pending a proposed appeal to the Supreme Court of Canada, following years of unsuccessful attempts to relitigate mortgage default issues. Mortgagors argued personal hardship and challenged the mortgagee’s enforcement steps while the mortgagee brought a cross‑motion to restrict further motions.  The motion judge denied the stay, holding that there was no serious issue and no irreparable harm, and that the balance of convenience favoured the mortgagee. The judge rejected the cross‑motion, finding that the mortgagors’ conduct had not yet reached the level of frivolous or vexatious abuse.

Construction Act #6

We previously notified our readers that major changes to the Construction Act were coming (see January 2025 newsletter), The first amendments were enacted November 24, 2024; the second amendments were enacted November 27, 2025, but the changes for each were only proclaimed in force on January 1, 2026. There are many changes, but we will only discuss the most important of them.

Annual Holdback Release

This is the big one. Previously, holdback would be released 45 days after substantial performance of the prime contract. This was not great for subs working at the beginning of a four-year prime contract (e.g. excavators, piling subs, etc.). Indeed, it was not great for subs working throughout the contract; 10% of their contract money for work they performed was held up for years. Cash flow was severely affected.

The legislature heard their cries of anguish and provided for a mandatory release of holdback annually (s. 26(1)) – assuming the prime contract extends for at least one year.