Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of March 31 to April 4, 2025.
In Business Development Bank of Canada v. 170 Willowdale Investments Corp., the appeal concerned the distribution of proceeds from the sale of hotel assets in a receivership. The appellant argued that RBC, an unsecured creditor, should not receive proceeds from the sale because part of the debt owed to it was not yet payable. The Court upheld the motion judge's decision and dismissed the appeal, confirming RBC's entitlement to payment. In McKenzie-Barnswell v. Xpert Credit Control Solutions Inc. the Court upheld the trial judge’s rescission of a construction contract on the basis of fraudulent misrepresentation. However, the trial judge had awarded expectation damages rather than reliance damages necessary to put the plaintiff back into the position they were before entering into the contract. The Court therefore reduced the damages award, including finding that proper amounts owing in respect of mortgage funds advanced remained owing and were not erased as a result of the fraud.
Table of Contents
Civil Decisions
Business Development Bank of Canada v. 170 Willowdale Investments Corp., 2025 ONCA 251
Keywords: Bankruptcy and Insolvency, Receiverships, Distributions, Priority, Unsecured Creditors, Civil Procedure, Orders, Interpretation, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 144, Courts of Justice Act, Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, s. 6(8), Housen v Nikolaisen, [2002] S.C.R. 235, Penner v. Niagara (Regional Police Services Board), [2013] 2 S.C.R. 125, Fontaine v. Ontario, 2020 ONCA 688, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Urbancorp Cumberland 2 GP Inc. (Re), 2020 ONCA 197
McKenzie-Barnswell v. Xpert Credit Control Solutions Inc., 2025 ONCA 253
Keywords: Torts, Unconscionability, Fraudulent Misrepresentation, Negligence, Deceit, Conversion, Real Property, Mortgages, Liability, Remedies, Ontario Building Code, Ontario Fire Code, Unconscionable Transactions Relief Act, R.S.O. 1990, c. U.2, s. 2, Phoenix Interactive Design Inc. v. Alterinvest II Fund L.P., 2018 ONCA 98, Uber Technologies Inc. v. Heller, 2020 SCC 16, 1018429 Ontario Inc. v. FEA Investments Ltd. (1999), 179 D.L.R. (4th) 268 (Ont. C.A.), Todd Family Holdings Inc. v. Gardiner, 2017 ONCA 326, Ontario Hardwood Flooring Co. v. Dowbenko, (1957) 7 D.L.R. (2d) 111 (Ont. C.A.), Peel Law Association v. Pieters, 2013 ONCA 396, Corridor Transport Inc. v. Vittorio Junior Lentini, 2024 ONCA 773, S.M. Waddams, The Law of Contracts, 8th ed. (Toronto: Thomson Reuters, 2022)
Short Civil Decisions
Stolove v. Waypoint Centre for Mental Health Care, 2025 ONCA 246
Keywords: Crown Liability, Civil Procedure, Class Proceedings, Appeals, Interveners, Friends of the Court, Mental Health Act, R.S.O. 1990, c. M.7, Rules of Civil Procedure, r. 13.02, Stolove v. Waypoint Centre for Mental Health Care, 2024 ONSC 3639, Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (3d) 164 (C.A.), Bedford v. Canada (Attorney General), 2009 ONCA 669
Keywords: Wills and Estates, Formal Validity, Civil Procedure, Appeals, Extensions of Time, Succession Law Reform Act, R.S.O. 1990, c. S.26, s. 21.1(1), Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131, Darwin Construction (BC) Ltd. v. PC Urban Glenaire Holdings Ltd., 2023 BCCA 436
Keywords: Corporations, Shareholders, Oppression, Remedies, Oppression Remedy
Garlicky Mediterranean Grill Inc. v. 2715762 Ontario Inc., 2025 ONCA 248
Keywords: Contracts, Real Property, Commercial Leases
Keywords: Real Property, Torts, Deceit, Unjust Enrichment, Champoux v. Jefremova, 2021 ONCA 92
De Castro v. Arista Homes Limited, 2025 ONCA 260
Keywords: Contracts, Employment, Wrongful Dismissal, Reasonable Notice, Damages in Lieu of Notice, Employment Standards Act, 2000, S.O. 2000, Waksdale v. Swegon North America Inc., 2020 ONCA 391, Dufault v. Ignace (Township), 2024 ONCA 915, Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986
Tewari v. Hantover Canada Inc., 2025 ONCA 261
Keywords: Civil Procedure, Striking Pleadings, Frivolous, Vexatious, Abuse of Process, Rules of Civil Procedure, rr. 21.01(3)(c) and (d), 25.11
Business Development Bank of Canada v. Neural Systems Inc., 2025 ONCA 262
Keywords: Contracts, Debtor-Creditor, Civil Procedure, Summary Judgment
CIVIL DECISIONS
Business Development Bank of Canada v. 170 Willowdale Investments Corp., 2025 ONCA 251
[Zarnett, Sossin and Copeland JJ.A.]
COUNSEL:
D. W. Trafford, for the appellant
T. Van Klink, for the respondent The Fuller Landau Group Inc.
T. Hogan, for the respondent Royal Bank of Canada
Keywords: Bankruptcy and Insolvency, Receiverships, Distributions, Priority, Unsecured Creditors, Civil Procedure, Orders, Interpretation, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 144, Courts of Justice Act, Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, s. 6(8), Housen v Nikolaisen, [2002] S.C.R. 235, Penner v. Niagara (Regional Police Services Board), [2013] 2 S.C.R. 125, Fontaine v. Ontario, 2020 ONCA 688, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Urbancorp Cumberland 2 GP Inc. (Re), 2020 ONCA 197
FACTS:
In 2023, The Fuller Landau Group Inc. (FLG) was appointed as receiver for 170 Willowdale Investments Corp. (the Debtor) under the Bankruptcy and Insolvency Act and the Courts of Justice Act. FLG sold the Debtor's hotel assets, using part of the proceeds to satisfy creditors with security over the property. FLG sought approval to distribute the remaining funds to other creditors and the Debtor as well as FLG's discharge. FLG also sought approval to distribute around $900,000 to the Royal Bank of Canada (RBC), which the Debtor contested. The Debtor argued that RBC, having no security over the real property, should not receive proceeds from its sale and that one portion of its debt to RBC was not yet due (the CEBA loan).
The appeal focused on the interpretation of the Approval and Vesting Order (AVO), which allowed proceeds from the sale to be distributed based on the same priority as the real property, placing RBC behind secured creditors. The motion judge dismissed the appeal, confirming that RBC was entitled to a distribution for its due debts, even if the CEBA loan was not yet payable, as the receivership was nearing its end.
ISSUES:
- Did the motion judge err in rejecting the debtor’s interpretation of the AVO?
- Did the motion judge err in authorizing a distribution on account of the CEBA loan?
HOLDING:
Appeal dismissed.
REASONS:
1. No.
The Court held that the motion judge correctly rejected the appellant Debtor’s interpretation of paragraph 4 of the Approval and Vesting Order (AVO). The Court rejected the appellant’s argument that RBC had no security in the real property before the sale and was not entitled to sale proceeds.
The Court reaffirmed that the interpretation of a court order follows the principles of statutory interpretation, requiring an analysis of text, context, and purpose. The court held that paragraph 4 of the AVO governed the ranking of creditor claims and specified that claims and encumbrances attached to the net proceeds in the same priority they had before the sale. RBC, as an unsecured creditor with respect to the real property, ranked behind those with secured claims, but paragraph 4 did not provide that an unsecured creditor receives nothing if proceeds remain after secured claims are satisfied, nor did it grant priority to the appellant over an unsecured creditor.
The Court further held that the context of the AVO, which was designed to facilitate a receivership sale and ensure creditors were paid according to their priorities, did not support the appellant’s position. Accepting the appellant’s argument would allow sale proceeds to vest in the appellant while leaving creditors unpaid, contradicting fundamental insolvency principles.
Finally, the Court held that the purpose of paragraph 4 of the AVO was to determine creditor ranking, not to prioritize the appellant over valid creditor claims. Accordingly, the Court dismissed this ground of appeal.
2. No.
The Court held that the motion judge did not err in authorizing a distribution to RBC for the CEBA loan, despite the appellant’s argument that it was not yet payable. While the appellant did not dispute that the RBC HASCAP loan and VISA facility were due, it claimed the judge made a palpable and overriding error by failing to consider an email from RBC extending the CEBA loan payment deadline. The Court found that any failure to consider the email was harmless. The CEBA loan was still owed, even if not yet due, and there were already interest arrears. Since the receivership was ending, the receiver had to either pay the loan or reserve funds for its eventual payment. The appellant did not show that immediate payment caused any economic disadvantage or that the loan would not ultimately be payable. Accordingly, the Court held that the distribution to RBC was a reasonable resolution and dismissed this ground of appeal.
McKenzie-Barnswell v. Xpert Credit Control Solutions Inc., 2025 ONCA 253
[Lauwers, Zarnett and Pomerance JJ.A.]
COUNSEL:
J. Rosekat and V. Ford, for the appellants
O. Vinton, for the respondent
Keywords: Torts, Unconscionability, Fraudulent Misrepresentation, Negligence, Deceit, Conversion, Real Property, Mortgages, Liability, Remedies, Ontario Building Code, Ontario Fire Code, Unconscionable Transactions Relief Act, R.S.O. 1990, c. U.2, s. 2, Phoenix Interactive Design Inc. v. Alterinvest II Fund L.P., 2018 ONCA 98, Uber Technologies Inc. v. Heller, 2020 SCC 16, 1018429 Ontario Inc. v. FEA Investments Ltd. (1999), 179 D.L.R. (4th) 268 (Ont. C.A.), Todd Family Holdings Inc. v. Gardiner, 2017 ONCA 326, Ontario Hardwood Flooring Co. v. Dowbenko, (1957) 7 D.L.R. (2d) 111 (Ont. C.A.), Peel Law Association v. Pieters, 2013 ONCA 396, Corridor Transport Inc. v. Vittorio Junior Lentini, 2024 ONCA 773, S.M. Waddams, The Law of Contracts, 8th ed. (Toronto: Thomson Reuters, 2022)
FACTS:
The appellant S.J. was the director of a private mortgage lender, the appellant Xpert Credit. The respondent, S.M.B., had known S.J. for some time and borrowed money from his company. Over the course of a few years, S.J. had urged the respondent to enter a series of mortgages with Xpert Credit which were ultimately consolidated into one mortgage. At S.J.’s recommendation, the respondent entered into a construction contract for home renovations with what S.J. represented to be another of his companies, Right Choice, with the construction to be managed by Xpert Credit and the cost of construction to be added to the mortgage debt. It was later revealed that Right Choice was a fictitious company.
Problems arose with the construction and the work was left incomplete. The respondent brought an action seeking a declaration that the mortgage and construction contract were null and void or to be set aside, alleging fraud and other wrongdoing. The appellants denied any wrongdoing and brought an action to enforce the terms of the mortgage.
The trial judge found:
a. That the appellant Xpert Credit was negligent in the management of the construction contract;
b. That the appellants breached the construction contract;
c. That the appellant, S.J., made a fraudulent misrepresentation that induced the respondent to enter into the mortgages and construction contract;
d. That the appellants committed the tort of deceit; and
e. That the transactions, including the construction contract and the mortgages, were unconscionable and should be set aside on that basis.
By way of remedy, the trial judge set aside the construction contract and the various mortgages (merged into the blanket mortgage) and awarded damages for negligence and breach of contract. The appellants appealed on both the findings of liability and remedy.
ISSUES:
On appeal:
1. Did the trial judge err in applying the incorrect test for unconscionability?
2. Did the trial judge err in incorrectly finding that the appellants’ misrepresentation about Right Choice was material and relied on by the respondent?
3. Did the trial judge err in setting aside the entire mortgage and awarding an unspecified amount of damages for negligence and breach of contract?
By way of cross-appeal:
4. Did trial judge err in finding that the Consumer Protection Act did not apply?
5. Should the trial judge have found that the impugned mortgage be set aside on the basis of undue influence?
6. Did the trial judge err in declining to make a finding of conversion against the appellants?
7. If liable for the mortgage, should the trial judge have held that the respondent should be permitted to exercise a right of set-off?
HOLDING:
Appeal allowed in part. Cross-appeal dismissed.
REASONING:
1. Yes.
The Court found that the trial judge erred by applying the incorrect test for unconscionability, however, ultimately did not interfere with the unconscionability finding. The trial judge applied the test approved by the Court in Phoenix Interactive Design Inc. v. Alterinvest II Fund L.P. However, the correct test is found in Uber Technologies Inc. v. Heller. The appellants argued that, having applied the wrong legal test, the trial judge’s finding of unconscionability could not stand. The Court disagreed because the previous test was more stringent than the correct test. Accordingly, the trial judge found the transaction to be unconscionable on a more stringent standard than required and made specific findings that, on their face, satisfied the dual requirements of the correct test.
2. No.
The Court found that the trial judge correctly held that the appellants’ misrepresentation about Right Choice was material and relied upon by the respondent. The appellant argued that S.J. did not intend to deceive or induce the respondent into the contract and that any reference to Right Choice was immaterial because the respondent knew she was dealing with S.J. and his companies. The Court disagreed with the appellant and upheld the trial judge’s finding that S.J. “made the false statements deceptively and with the intention of having the [respondent] agree to having the work done and entering into a contract with Right Choice, a fictitious company. This materially induced the [respondent] to act to her detriment.” Dually, the Court affirmed that these were reasonable inferences that were open to the trial judge on the whole of the evidence.
3. Yes.
The Court found that the trial judge was correct on liability but had erred in the remedy granted. The Court found two errors in the remedy:
a. Error in the contractual remedy
The trial judge incorrectly awarded damages that would have covered the cost of completing the construction. One of the central findings of the trial judge was that the contract was to be set aside due to fraud. The usual remedy for a fraudulently induced contract is rescission of the contract. One cannot logically rescind a contract yet, at the same time, order its enforcement. When induced by fraud to enter into a contract, the deceived party is entitled to sue in tort for damages based on the party’s out-of-pocket loss. However, the deceived party is not entitled to expectation or “loss of bargain” damages. The Court found that the respondent was not entitled to the cost of completing the work of the contract, though she was entitled to be compensated for her out-of-pocket loss, and the repair of damage to her property flowing from the negligent work. Accordingly, the Court ordered a lesser award as being the amount necessary to repair the property and return the respondent to their original position, as if the contract had never been entered into.
b. Failure to sever the mortgage
The trial judge set aside the entire consolidated mortgage because monies advanced for the performance of the construction contract were rolled into that mortgage. However, the Court found that this did not mean that the entire debt should have been set aside. The respondent owed the severable amounts of the mortgage to Xpert Credit that were not invalidated by the fraud.
4. No.
The Court found the trial judge did not err in determining that the Consumer Protection Act did not apply in this case.
5. N/A
The Court found it unnecessary to consider the issue of undue influence given that it upheld the trial judge’s finding that the construction contract must be set aside due to fraudulent misrepresentation and unconscionability.
6. No.
The Court found that the trial judge did not err in declining to make a finding of conversion.
7. N/A.
The Court found that the issue of set-off would have depended on the respondent’s contractual entitlements to funds under the mortgages which had been set aside. Accordingly, the issue no longer arose.
SHORT CIVIL DECISIONS
Stolove v. Waypoint Centre for Mental Health Care, 2025 ONCA 246
[Huscroft J.A. (Motion Judge)]
COUNSEL:
J. Rochon, G. Nayerahmadi and P. Mann, for the appellants
E. Bowker, D. Berlach, C. Breukelman, D. Forster, G. Murdoch, P. Morrison and K. M. Frelick, for the respondents Waypoint Centre for Mental Health Care, C. L., R. D. and L. A.
V. Glasser, R. Rammaya, M. Saad, D. Huffaker and M. Stevenson, for the respondent His Majesty the King in Right of Ontario
A. Szigeti, for the proposed intervener the Empowerment Council
Keywords: Crown Liability, Civil Procedure, Class Proceedings, Appeals, Interveners, Friends of the Court, Mental Health Act, R.S.O. 1990, c. M.7, Rules of Civil Procedure, r. 13.02, Stolove v. Waypoint Centre for Mental Health Care, 2024 ONSC 3639, Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (3d) 164 (C.A.), Bedford v. Canada (Attorney General), 2009 ONCA 669
[Paciocco J.A. (Motions Judge)]
COUNSEL:
N. Colville-Reeves and R. McGlashan, for the moving parties
J. Stebbing and C. Cheung, for the responding party
Keywords: Wills and Estates, Formal Validity, Civil Procedure, Appeals, Extensions of Time, Succession Law Reform Act, R.S.O. 1990, c. S.26, s. 21.1(1), Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131, Darwin Construction (BC) Ltd. v. PC Urban Glenaire Holdings Ltd., 2023 BCCA 436
[Roberts, Trotter and George JJ.A.]
COUNSEL:
B. Trickett and T. Nichini, for the appellant
N. Lim, for the respondents
Keywords: Corporations, Shareholders, Oppression, Remedies, Oppression Remedy
Garlicky Mediterranean Grill Inc. v. 2715762 Ontario Inc., 2025 ONCA 248
[Simmons, Wilson and Madsen JJ.A.]
COUNSEL:
S. Siddiqui and O. Ali, for the appellant
E. Bordman and L. Poole, for the respondent
Keywords: Contracts, Real Property, Commercial Leases
[Tulloch C.J.O., Pepall and Pomerance JJ.A.]
COUNSEL:
A. Ostrom, for the appellant
S. Greaves and B. Markusoff, for the respondents
Keywords: Real Property, Torts, Deceit, Unjust Enrichment, Champoux v. Jefremova, 2021 ONCA 92
De Castro v. Arista Homes Limited, 2025 ONCA 260
[Pepall, Monahan and Pomerance JJ.A.]
COUNSEL:
N. G. Wilson, for the appellant
T. Lee, for the respondent
Keywords: Contracts, Employment, Wrongful Dismissal, Reasonable Notice, Damages in Lieu of Notice, Employment Standards Act, 2000, S.O. 2000, Waksdale v. Swegon North America Inc., 2020 ONCA 391, Dufault v. Ignace (Township), 2024 ONCA 915, Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986
Tewari v. Hantover Canada Inc., 2025 ONCA 261
[Roberts, Trotter and George JJ.A.]
COUNSEL:
G. T., acting in person
K. Graham and J. Rumeo, for the respondent
Keywords: Civil Procedure, Striking Pleadings, Frivolous, Vexatious, Abuse of Process, Rules of Civil Procedure, rr. 21.01(3)(c) and (d), 25.11
Business Development Bank of Canada v. Neural Systems Inc., 2025 ONCA 262
[Lauwers, Nordheimer and Wilson JJ.A.]
COUNSEL:
J. W., acting in person
J. Potasky, for the respondent
Keywords: Contracts, Debtor-Creditor, Civil Procedure, Summary Judgment
The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us.
Any article or other information or content expressed or made available in this Section is that of the respective author(s) and not of the OBA.