Legal Blog

Sword

Live by the sword; die by the sword. Bad things can happen when a plaintiff decides to commence an action while still an undischarged bankrupt and, worse yet, does not notify his trustee in bankruptcy of his claim. The plaintiff in Little v. Bramcan Investments Limited, a 2025 decision of the Ontario Court of Appeal, learned this the hard way.

Complaint

Tenant started an action against his former landlord and two of the landlord’s officers and directors. In the action, tenant claimed the value of personal property that landlord converted (by disposition). All of the assets arose out of a fitness and strength building business that tenant ran. The statement of claim alleged that the value of the assets was approximately $250,000, but tenant later claimed that the assets were worth $430,000. Presumably, landlord had taken possession of the leased premises upon tenant’s default and, deciding the assets had no real sale value that would have exceeded the costs of disposition, pitched them.

Part Performance

We all know about the Statute of Frauds: a contract for the sale of land must be in writing. We also know that the exception to the general rule is the doctrine of part performance. The Ontario Court of Appeal has written several decisions explaining part performance. One of the most recent is in 2730453 Ontario Inc. v. 2380673 Ontario Inc. 2025 ONCA 112, leave to appeal to the Supreme Court of Canada refused.

Trial Findings

The trial judge found that (i) in September 2019, a seller orally agreed to sell lands it owned to a purchaser for a price of $4.1 million, closing on or before January 8, 2020, (ii) after the parties made their agreement, they engaged in a process toward closing, (iii) on the closing date, the purchaser tendered the required documents and funds, (iv) the seller refused to close without legal justification, and (v) referring to conduct leading up to and at the aborted closing, the doctrine of part performance applied. The trial judge ordered the seller to specifically perform the oral agreement.

Adjudication Awards

We are getting more and more court decisions regarding adjudication awards. Although the courts could have narrowly interpreted the adjudication and prompt payment provisions of the Construction Act, they have not. Courts have been loath to substitute their opinions for those of the adjudicators. They have confined themselves to the narrow remedies set out in the Act, acting only if an adjudicator’s decision is absurd. They also have done their best to ensure that the awards of adjudicators are paid. We base these conclusions, in part, on the following trilogy of cases: MGW Homes Design Inv v. Pasqualino, a 2024 decision of the Divisional Court, Integricon Construction Inc. v. Steven, a 2025 decision of the Ontario Superior Court of Justice, and Jamrik v. 2688126 Ont. Inc., a 2024 decision of the Ontario Superior Court of Justice (Divisional Court).

Essential Term for Contract

Wright v. Wright 2026 Ont CA

Adult child and her spouse sought enforcement of an agreement granting them an option to purchase property from child’s mother. The court determined that a missing term regarding sale proceeds was not essential and could be severed. It further found no undue influence, fiduciary breach, or unconscionability in light of independent legal advice and the parties’ intentions. Accordingly, the agreement was enforceable and the plaintiff succeeded.

Frivolous Action or Appeal

2257573 Ontario Inc. v. Furney, 2026 ONCA 124

Mortgagor moved to re‑open a previously dismissed appeal after mortgagee had obtained summary judgment enforcing mortgage obligations that had already been upheld by the appellate court. The court dealt with the motion under Rule 2.1 of the Rules of Civil Procedure, which authorises early dismissal of proceedings that are plainly frivolous, vexatious, or an abuse of process. It found that the motion raised no exceptional circumstances capable of justifying the extraordinary remedy of re‑opening an appeal and instead sought to relitigate issues that were or could have been raised previously. Exercising its gatekeeping function under Rule 2.1, the court summarily dismissed the motion as an abuse of process with no chance of success.

Judicial Review of Adjudicator’s Decision

Sayers v. Gay Co.  2026 ONSC918 (Div Ct)

Owner sought judicial review of an adjudicator’s prompt payment determination requiring interim payment to contractor, asserting jurisdictional error, procedural unfairness, fraud, improper treatment of delay and set‑off claims, and bias. The court rejected each ground, holding that the adjudicator reasonably applied the Construction Act and the parties’ written contract, which did not provide contractual entitlement to withhold payment for delay. The court emphasized that prompt payment adjudication is intended to ensure the immediate flow of funds despite unresolved disputes, and that complexity or alleged prejudice does not defeat the statutory scheme. As no reviewable error was established under the limited grounds in the Act, the court dismissed the application.

Evidence and Self-Represented Litigant

Equifax Canada Co. v. Oh, 2026 ONCA 76

The plaintiff obtained summary judgment against the defendant, who sought to appeal but failed to meet several procedural deadlines while acting without counsel. The defendant brought a motion seeking transcripts of the summary judgment proceedings and additional time to perfect the appeal. The court concluded that transcripts were necessary because the motion judge permitted the defendant to rely on unsworn materials and oral submissions that were treated as evidence, making it impossible to assess the record without transcripts. To ensure a fair and intelligible appeal, the court granted the requested orders and extended the perfection deadline, leaving issues of admissibility and costs to be determined by the appeal panel. The court noted: “When a self-represented litigant who is making submissions begins to make statements that are more like evidence, the litigant should be sworn in and put in the witness box after being cautioned that the litigant will be subject to immediate cross-examination by opposing counsel or opposing litigant if self-represented on any factual statements made.”

Setting Aside Registrar’s Dismissal – Delay & Prejudice

Arumugasamy v. Subaschandiran, 2026 ONCA 102

Lender brought an action against borrower seeking recovery of unpaid loans, which the borrower opposed while advancing a much larger counterclaim. Although the matter progressed through pleadings and discoveries and reached the trial list, the action was struck and later administratively dismissed because lender’s lawyer failed to attend court and “lost sight” of the file. The appeal court allowed the action to be restored, holding that the delay was attributable to counsel’s inadvertence rather than lender’s own conduct, particularly where lender repeatedly attempted to obtain updates from counsel. The court further concluded that the defendant suffered no real prejudice, especially given borrower’s failure to prosecute the counterclaim or respond to lender’s counsel.

Penalty-Forfeiture

We have extensive jurisprudence regarding penalties, liquidated damages, relief from forfeiture, and unconscionability. The concepts are often jumbled together and their application becomes confusing. We deal with two cases that, depending on your viewpoint either alleviate the confusion or add to it. The first is 600 Sunningdale GP Inc. v. First Source Mortgage Corporation 2024 ONCA 252; the second is Kestenberg Siegal Lipkus LLP v. Royal and Sun Alliance Insurance 2024 ONCA 607.

Sunningdale

The outcome of this case depended on the interpretation of a financing commitment letter (the “loan agreement“). A developer and lender entered into the loan agreement for a $15M construction development financing. The loan agreement stipulated that the developer would pay a lender fee of $426,500, $100,000 upon its signing and the balance from the loan advance.

Due Diligence

The Fraudulent Conveyances Act allows “creditors or others” to attack improper mortgages. We have occasionally attacked mortgages as being fraudulent under the Act, usually when we determine that the mortgages are really a sham. Can mortgages be attacked under the Act when the mortgages are real and secure money actually advanced under the mortgages? As usual, the answer depends on the circumstances. One set of these circumstances formed the factual basis for the decision in Chen v. Huang, a 2025 decision of the Ontario Court of Appeal.

Overview

The applicants were majority shareholders of a corporation that owned a multi‑unit residential property. The minority shareholder was the corporation’s sole director and officer. Acting alone, the officer executed a $6M second mortgage (1 year at 13% per year) and a $1.7M third mortgage (6 months at 15% per year) against the property. The mortgagees were arm’s‑length private lenders.