Article

In Lozovski v. Equityline Mortgage Investment Corporation, the Court of Appeal found that a receivership order granting investigative powers to the receiver did not engage the automatic right of appeal under ss. 193(a) or (b) of the BIA and declined to grant leave to appeal under s. 193(e), allowing the receivership to proceed.

In Aldahleh v. Zayed, the Court dismissed the moving party’s motion to seek a second extension of time to perfect her appeal and for a stay of an ongoing Superior Court family trial over custody and parenting in a multi-jurisdictional context. The Court found that the moving party had not met her burden of demonstrating that the extension of time should be granted and accordingly it was not in the interests of justice to grant her a second extension of time to perfect her appeal. As for a stay or adjournment of the ongoing trial, that request was more properly for the trial court to consider.

In Next Pathway Inc. v. Informatica Inc., the Court dismissed an appeal from the order refusing to stay an Ontario action on the basis of a forum selection clause in a contract. The Court upheld the motion judge’s finding that the contracts in question were contracts of adhesion, that the forum selection clause in one of the contracts was ambiguous due to the absence of the word “exclusive” and any assertion of attornment, and that applying the interpretive doctrine of contra proferentem, the clause should be read as non-exclusive. Because the claims arising from the two related contracts were “inextricably linked,” the Court agreed that the entire action was properly before the Ontario court.

In L.B. v. Smalley, the self-represented appellant challenged the requirement that she, as litigation guardian for her minor child who had sued doctors in a medmal case, was required to be represented by counsel. She argued that no counsel was willing to take on the case. The Court quashed the appeal for lack of jurisdiction. The order requiring the appellant to retain counsel was interlocutory, dealt only with procedural rights and did not finally determine the dispute. The Court dismissed the appellant’s demand that the Attorney General’s lawyers be required to conduct the motions and appeal entirely in French. The Court held that the Courts of Justice Act guarantees bilingual proceedings, which includes a bilingual judge, interpretation and translation. However, it does not entitle a party in a civil proceeding to require opposing counsel to plead in a particular language. The right to require bilingual counsel representing the Crown exists only in provincial offences prosecutions.

In Gutierrez v. Watchtower Bible and Tract Society of Canada, the Court dismissed an appeal from the dismissal of a motion to certify a proposed class action. The appellants alleged they were sexually abused as children by Jehovah’s Witness congregation members. The Court held that the amended statement of claim did not disclose a cause of action in negligence, breach of fiduciary duty or vicarious liability against the respondent Society. The appellants’ pleadings did not allege any direct relationship, facilities, services or programs connecting the Society to the minor children or the circumstances of the alleged abuse. The Court also held that a class proceeding was not the preferable procedure because of the inevitable need for individual issues trials. Finally, the Court rejected the argument that a successful certification of a similar action in Quebec required certification in Ontario, noting the different certification criteria in the two provinces.

2069586 Ontario Inc. v. Sovereign General Insurance Company concerned the interpretation of an errors and omissions insurance policy and fraud endorsement of a mortgage brokerage’s errors and omissions policy mandated by the regulator of mortgage brokers. The motion judge held that the funds held in trust that were misappropriated by one of the brokerage’s principals were not “mortgage funds” and therefore did not fall within the endorsement’s coverage for a “failure to advance or secure mortgage funds”. The Court disagreed, holding that the trust funds also constituted “mortgage funds” and that the policy had to be interpreted in its regulatory context. The Court held that the loss fell within the fraud endorsement, allowed the appeal, and granted summary judgment to the appellants.

Civil Decisions

Lozovski v. Equityline Mortgage Investment Corporation, 2026 ONCA 666

Keywords: Bankruptcy and Insolvency, Receiverships, Civil Procedure, Appeals, Leave to Appeal, Orders, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 193(a), 193(b), 193(e), 195, 243, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 101, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, PricewaterhouseCoopers Inc. v. Ramdath, 2018 MBCA 41, Ravelston Corp. (Re), 24 C.B.R. (5th) 256, Flight (Re), 2022 ONCA 526, Sam Lévy & Associés Inc. v. Azco Mining Inc., 2001 SCC 92

Aldahleh v. Zayed, 2026 ONCA 667

Keywords: Family Law, Parenting, Relocation, Jurisdiction, Conflict of Laws, Private International Law, Foreign Orders, Recognition and Enforcement, Civil Procedure, Appeals, Perfection, Extension of Time, Trials, Stays, Adjournments, Children’s Law Reform Act, R.S.O. 1990, c. C.12, s. 22(1)(b), 23 and 41, Rules of Civil Procedure, r. 3.02(1), Aldahleh v. Zayed, 2024 ONSC 547, Aldahleh v. Zayed, 2025 ONSC 4239, 2363523 Ontario Inc. v. Nowack, 2018 ONCA 286, Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131, Codina v. Canadian Broadcasting Corporation, 2020 ONCA 116, Ash v. Ontario (Chief Medical Officer), 2024 ONCA 398, Mahilum v. Consentino, 2024 ONCA 829, Javid Estate v. Watson, 2023 ONCA 665

Next Pathway Inc. v. Informatica Inc., 2026 ONCA 657

Keywords: Contracts, Contracts of Adhesion, Interpretation, Ambiguity, Contra Proferentem, Forum Selection Clauses, Torts, Inducing Breach of Contract, Intentional Interference with Economic Relations, Civil Procedure, Jurisdiction, Forum Non Conveniens, Stays, Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, Douez v. Facebook, Inc., 2017 SCC 33, Forbes Energy Group Inc. v. Parsian Energy Rad Gas, 2019 ONCA 372

L.B. c. Smalley, 2026 ONCA 659

Keywords: Torts, Negligence, MedMal, Constitutional Law, Equality Rights, Language Rights, Civil Procedure, Persons Under Disability, Litigation Guardians, Representation by Lawyer, Bilingual Proceedings, Appeals, Jurisdiction, Orders, Final or Interlocutory, expressio unius est exclusio alterius, Canadian Charter of Rights and Freedoms, ss. 7, 15(1), 16(3), 19, Constitution Act, 1867, s. 96, Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 6(1)(b), 19(1)(b), 125, 126, French Language Services Act, R.S.O. 1990, c. F.32, s. 5(1), Provincial Offences Act, R.S.O. 1990, c. P.33, Rules of Civil Procedure, rr. 1.03, 7.01(5), 15.01, Law Society of Ontario Rules of Professional Conduct, R. c. Beaulac, [1999] 1 S.C.R. 768, Zeitel c. Ellscheid, [1994] 2 S.C.R. 142, Lalonde c. Ontario (Commission de restructuration des services de santé) (2001), 56 O.R. (3d) 577 (C.A.), R. c. Dartiguenave, 2025 ONCA 2, Re Weidenfeld, 2008 CarswellOnt 6534 (C.A.), Willmot v. Benton, 2011 ONCA 104, Must v. Shkuryna, 2015 ONCA 665, Huang v. Braga, 2017 ONCA 268, Divitaris v. Gerstel, 2022 ONCA 605, Molani Estate v. Iran, 2023 ONCA 279, Ruth Sullivan, The Construction of Statutes, 7th ed., Toronto, LexisNexis, 2022

Gutierrez v. Watchtower Bible and Tract Society of Canada, 2026 ONCA 665

Keywords: Torts, Negligence, Assault and Battery, Duty of Care, Breach of Fiduciary Duty, Vicarious Liability, Civil Procedure, Class Proceedings, Certification, Necessary Parties, Preferable Procedure, Reasonable Cause of Action, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1), Quebec Code of Civil Procedure, RLRQ, c. C-25.01, art. 575, Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, Atlantic Lottery Corp. v. Babstock, 2020 SCC 19, R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, Darmar Farms Inc. v. Syngenta Canada Inc., 2019 ONCA 789, Rumley v. British Columbia, 2001 SCC 69, Cloud v. Canada (Attorney General) (2004), 73 O.R. (3d) 401 (C.A.), Cavanaugh v. Grenville Christian College, 2014 ONSC 290 (Div. Ct.), Cavanaugh v. Grenville Christian College, 2013 ONCA 139, Dolmage v. Ontario, 2010 ONSC 1726, Dolmage v. Ontario, 2010 ONSC 6131, Seed v. Ontario, 2012 ONSC 2681, Francis v. Ontario, 2018 ONSC 5430, Francis v. Ontario, 2020 ONSC 1644, Francis v. Ontario, 2021 ONCA 197, Banman v. Ontario, 2023 ONSC 6187, Taylor v. Canada (Attorney General), 2012 ONCA 479, Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, John Doe v. Bennett, 2004 SCC 17, K.L.B. v. British Columbia, 2003 SCC 51, AIC Limited v. Fischer, 2013 SCC 69, Bayens v. Kinross Gold Corporation, 2014 ONCA 901, Carcillo v. Ontario Major Junior Hockey League, 2025 ONCA 652, Carom v. Bre-X Minerals Ltd. (2000), 51 O.R. (3d) 236 (C.A.), A. c. Watch Tower Bible and Tract Society of Canada, 2019 QCCS 729, A. c. Watch Tower Bible and Tract Society of Canada, 2020 QCCA 1701, Infineon Technologies AG v. Option consommateurs, 2013 SCC 59, Vivendi Canada Inc. v. Dell’Aniello, 2014 SCC 1, Jensen v. Samsung Electronics Co. Ltd., 2023 FCA 89

2069586 Ontario Inc. v. Sovereign General Insurance Company, 2026 ONCA 655

Keywords: Regulated Professions, Mortgage Brokers, Mandatory Insurance, Contracts, Insurance, Interpretation, Professional Errors & Omissions, Fraud Coverage, Ambiguity, Contra Proferentem, Civil Procedure, Boomerang Summary Judgment, Fresh Evidence, Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29, Mortgage Brokerages: Standards of Practice, O. Reg. 188/08, Mortgages Act, R.S.O. 1990, c. M.40, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Emond v. Trillium Mutual Insurance Co., 2026 SCC 3, SIR Corp. v. Aviva Insurance Company of Canada, 2023 ONCA 778, 1298417 Ontario Ltd. v. Lakeshore (Town), 2014 ONCA 802, Digby v. General Accident Fire and Life Assurance Corp. Ltd., [1943] A.C. 121 (H.L.), Laurence v. Davies, [1972] 2 Lloyd’s Rep. 231 (Crown Ct.), R&S Pilling t/a Phoenix Engineering v. UK Insurance Ltd., [2019] UKSC 16, [2020] A.C. 1025, 713860 Ontario Ltd. v. Royal Trust Corp. of Canada (1996), 27 O.R. (3d) 559 (Gen. Div.), 6874843 Canada Ltd. (Panamerican Mortgages) v. Ontario (Superintendent Financial Services), 2012 ONFST 23, Unique Broadband Systems, Inc. (Re), 2014 ONCA 538, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Sabean v. Portage La Prairie Mutual Insurance Co., 2017 SCC 7, Salah v. Timothy’s Coffees of the World Inc., 2010 ONCA 673, Co-operators Life Insurance Co. v. Gibbens, 2009 SCC 59, Scott v. Wawanesa Mutual Insurance Co., [1989] 1 S.C.R. 1445, National Bank of Greece (Canada) v. Katsikonouris, [1990] 2 S.C.R. 1029, Goudie v. Ottawa (City), 2003 SCC 14, Geoff R. Hall, Canadian Contractual Interpretation Law, 4th ed. (2020), Sir Kim Lewison, The Interpretation of Contracts, 8th ed. (2024), Oxford English Dictionary

Short Civil Decisions

De Longte v. De Longte, 2026 ONCA 656, 2026 ONCA 656

Keywords: Family Law, Civil Procedure, Appeals, Fraud, Ineffective Assistance of Counsel, Fresh Evidence, Costs, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 7(5), Rules of Civil Procedure, r. 25(19), D.W. v. White et al. (2004), 189 O.A.C. 256 (C.A.), Merchandizing Inc. v. Canadian Professional Soccer League Inc., 2021 ONCA 520, Ricketts v. Veerisingnam, 2025 ONSC 841, Baker v. Blue Cross Life Insurance Company of Canada, 2023 ONCA 842, R. v. Joanisse (1995), 102 C.C.C. (3d) 35 (Ont. C.A.), R. v. Widdifield (1995), 25 O.R. (3d) 161 (C.A.), Palmer v. The Queen, [1980] 1 S.C.R. 759

Ishakis v. Solmon Rothbart Tourgis Slodovnick LLP, 2026 ONCA 661

Keywords: Contracts, Solicitor and Client, Assessments

Newton v. Grillo, 2026 ONCA 663

Keywords: Family Law, Child Support, Parenting, Civil Procedure, Appeals, Courts of Justice Act, R.S.O. 1990, c. C. 43, ss. 19(1)(a.1), 110(1), Newton v. Grillo, 2026 ONCA 396, Bernard v. Fuhgeh, 2020 ONCA 529, Whaling v. Cossarini, 2025 ONCA 173

Smith v. Oliphant, 2026 ONCA 662

Keywords: Civil Procedure, Appeals, Leave to Appeal

Mazzeo v. Mazzeo, 2026 ONCA 674

Keywords: Family Law, Parenting, Relocation, Child Abduction, Best Interests of the Child, Hague Convention on the Civil Aspects of International Child Abduction, Can. T.S. 1983 No. 35, Mazzeo v. Mazzeo, 2026 ONCA 447, Barendregt v. Grebliunas, 2022 SCC 22

Ramcharran v. Ramcharran, 2026 ONCA 678

Keywords: Real Property, Resulting Trusts

Cycle Toronto v. Ontario (Attorney General), 2026 ONCA 676

Keywords: Municipal Law, Constitutional Law, Civil Procedure, Appeals, Costs, Highway Traffic Act, R.S.O. 1990, c. H.8, Cycle Toronto v. Ontario (Attorney General), 2026 ONCA 582

Alnwick/Haldimand (Township) v. Jarvis, 2026 ONCA 675

Keywords: Civil Procedure, Appeals, Costs, Corporation of the Township of Alnwick et al v. Jarvis, 2025 ONSC 5594

DiMartino v. Sediq, 2026 ONCA 683

Keywords: Contracts, Interpretation

CIVIL DECISIONS

Lozovski v. Equityline Mortgage Investment Corporation, 2026 ONCA 666

[Lauwers J.A. (Motion Judge)]

Counsel:

M. R. Harris, for the respondents/moving parties/responding parties
G. Bazov, for the appellant/responding party/moving party

facts:

Equityline Mortgage Investment Corporation (“EMIC”) appealed from an order appointing a receiver over its assets and properties (the “Order”).

Two motions were before the Court: the respondents on appeal moved for directions as to whether an appeal lies as of right under ss. 193(a) and 193(b) of the Bankruptcy and Insolvency Act (the “BIA”). Correspondingly, EMIC moved for a declaration that it has an appeal as of right or in the alternative, sought leave to appeal under s. 193(e) of the BIA.

EMIC’s sole remaining director and officer, S.S., had been charged criminally in connection with the subject matter of the receivership application.

One of EMIC’s creditors, N.R., had invested in EMIC with his investment secured by a general security agreement.

N.R.’s co-lender, Hallmark Mortgage Corporation (“Hallmark”), had been paid out, had knowledge of the receivership application and consented to it but chose not to participate.

The appointed receiver had been unable to progress with the receivership because EMIC had taken the position that its pursuit of an appeal stayed the receivership.

issues:

1) Does an appeal lie as of right under s. 193(a) of the BIA on the basis that the Order involves “future rights”?

2) Does an appeal lie as of right under s. 193(b) of the BIA on the basis that the Order is “likely to affect other cases of a similar nature in the bankruptcy proceedings”?

3) Should leave to appeal be granted under s. 193(e) of the BIA?

holding:

Respondents’ motion granted. EMIC’s motion dismissed.

reasoning:

1) No.

EMIC provided two arguments in support of its position that there is an appeal as of right under s. 193(a) as it affected “future rights”. First, that the Order grants wide-ranging investigative powers to the receiver to determine what is remaining for distribution to EMIC’s creditors, which will affect future rights in the existing and potential new criminal proceedings EMIC’s sole director and officer was involved in. Second, that there were priority entitlements listed in Schedule B of the appointment order that only arose after realization and adjudication. Specifically, EMIC argued that N.R. may invoke receivership enforcement without the involvement of Hallmark.

The Court disagreed with EMIC and held that the receiver’s investigative powers had nothing to do with “future rights” within the meaning of s. 193(a). To affect future rights, the Order must involve the future rights of those with an economic interest in the debtor company, i.e. its creditors or shareholders. Instead, the investigative powers are categorized as procedural rights since they merely allow the receiver to fulfill its mandate.

The Court rejected EMIC’s second argument for invoking s. 193(a), that there were priority entitlements listed in Schedule B of the appointment order that only arose after realization and adjudication. The Court emphasized that future rights are inchoate, meaning that while they did not exist now, they might arise in the future. The Court found that Schedule B merely reserved the determination of those priorities to a date in the future but were capable of being determined then. Accordingly, any entitlements listed in Schedule B were characterized as presently existing rights that were exercisable in the future.

2) No.

EMIC provided two arguments in support of its position that there was an automatic stay of proceedings under s. 193(b). First, that the Order under appeal was likely to affect a similar, ongoing receivership proceeding involving an affiliate of EMIC in which EMIC was a limited partner. Second, that the determination of Schedule B priorities depended on the outcome of the appeal.

The Court rejected EMIC’s first argument, emphasizing that s. 193(b) was not applicable as it only applies to issues arising in the same receivership proceedings.

The Court rejected EMIC’s second argument for two reasons. First, s. 193(b) deals with disputes that are likely to affect other cases involving the same or similar issues in the receivership. The Order did not determine the priorities of creditors; it only appointed a receiver. Second, the prospect of future priority disputes is not enough to rise to the level of a “real dispute” that would engage s. 193(b). Although its creditors might acknowledge that there could be a conflict, neither had sought to resolve that conflict by way of a motion.

3) No.

The Court emphasized that a decision to grant leave under s. 193(e) is discretionary and must be exercised in a flexible and contextual way, considering the three factors listed in Business Development Bank of Canada v. Pine Tree Resorts Inc. on whether the proposed appeal: (1) raised an issue that is of general importance to the practice in bankruptcy/insolvency matters or to the administration of justice as a whole, and is one that the Court should therefore consider and address; (2) is prima facie meritorious; and (3) would not unduly hinder the progress of the bankruptcy/insolvency proceedings.

The Court upheld the application judge’s exercise of discretion. Applying the three factors listed in Pine Tree Resorts, the Court found that: (1) the matter did not raise an issue of general importance beyond the interpretation of a general security agreement and fact-specific disputes; (2) the merits of the appeal came down to an interpretation of an agreement between N.R. and Hallmark and it was open to the application judge to permit the matter to proceed without Hallmark; and (3) granting leave would unduly hinder the receivership proceedings, as the receiver had already been unable to proceed due to EMIC’s unwarranted assertion that an automatic stay was then in effect.

Aldahleh v. Zayed, 2026 ONCA 667

[Monahan J.A. (Motion Judge)]

Counsel:

L.A., acting in person
Z. A.M. Z., acting in person
L. Goldfarb, appearing as amicus curiae

facts:

The moving party, L.A., and the responding party, Z.Z., were married in Kuwait. Their relationship broke down, resulting in a protracted custody dispute. A.A. moved to Canada with her children in 2021, and in October 2022, she brought an application for a parenting order before the Ontario Superior Court of Justice.

In February 2024, Tobin J. determined on a final basis that the Superior Court had jurisdiction to make a parenting order under s. 22(1)(b) and s. 23 of the Children’s Law Reform Act (“CLRA”), and dismissed Z.Z.’s request, pursuant to s. 41 of the CLRA, that the court recognize and enforce Kuwaiti orders which he argued granted him custody of the children (the “February 2024 Order”). The judge proceeded to make an interim order that the children reside primarily with L.A. and that she have decision-making responsibility.

In 2025, L.A. sought relief including recognition and enforcement of Kuwaiti orders which she claimed granted her custody of the children. Tobin J.’s July 18, 2025 order (the “July 2025 Order”) dismissed that relief and left the remaining parenting issues in dispute to be determined at trial. L.A. appealed Tobin J.’s refusal to recognize the prior Kuwaiti orders governing custody of the children in August 2025. However, she failed to perfect the appeal within the time prescribed. On October 1, 2025, L.A. was granted an extension of time to perfect her appeal by October 20, 2025, but she failed to perfect by that date.

L.A. brought a motion seeking a second extension of time to perfect her appeal of the July 2025 Order, as well as a stay of an ongoing Superior Court trial that commenced in June 2026 (the “Current Trial”) dealing with various parenting and other issues arising from the ongoing litigation between the parties. The trial judge ruled that any prior orders issued in Kuwait had been superseded by the February 2024 Order. The Current Trial had been adjourned but was scheduled to resume on September 28, 2026.

issues:

1. Should the moving party’s extension of time to perfect her appeal of the July 2025 Order be granted?

2. Should the moving party’s request for a stay of the Current Trial be granted?

holding:

Motion dismissed.

reasoning:

1. No.

The Court held that it was not in the interests of justice to grant L.A. a second extension of time to perfect her appeal of the July 2025 Order.

Rule 3.02(1) of the Rules of Civil Procedure provides that the Court may order an extension of time on such terms as are just. The primary consideration is whether it is in the interests of justice to grant an extension given the circumstances of the case. The Court considers four factors when applying this principle: 1) whether the appellant formed an intention to appeal within the relevant period, 2) length of, and explanation for delay, 3) prejudice to the respondent and 4) merits of the appeal. The onus is on the appellant to demonstrate that the extension of time should be granted.

While L.A. formed an intention to appeal the July 2025 Order in a timely way, the Court was not persuaded that she subsequently maintained that intention. Despite L.A. contacting the Court in December 2025 to inquire as to the steps required to perfect, she was advised that she would need to seek a second extension of time and she made no further efforts in that regard until the end of July 2026, after the judge ruled that the Kuwaiti custody orders were irrelevant to the issues before the court in the Current Trial. L.A. failed to reasonably explain the seven-month delay in seeking an extension of time to perfect. L.A. submitted that she was unable to perfect prior to the end of July 2026 because of other family or work duties and responsibilities. Yet, she was able during this period to prepare for and represent herself in the Current Trial which began in June 2026.

Finally, the Court found that there was little merit to L.A.’s appeal of the July 2025 Order. The Superior Court’s jurisdiction to make a parenting order under the CLRA was determined on a final basis by the February 2024 Order, which also refused to recognize and enforce Kuwaiti orders dealing with custody of the children. L.A. did not appeal the February 2024 Order. The July 2025 Order which L.A. now sought to appeal was simply a corollary of the February 2024 Order, even though it was L.A. rather than Z.Z. who was now seeking enforcement of Kuwaiti court orders. It was for this reason that the trial judge ruled at the outset of the Current Trial that any Kuwaiti orders were irrelevant to the issues before her, and that parenting orders would be determined based on the children’s current circumstances.

2. No.

Given the ruling on the first issue, it was unnecessary to consider L.A.’s further request that the Current Trial be stayed or adjourned. The Court observed, however, that there was no dispute that the Superior Court had jurisdiction over the parties and the legal issues before the court, and any request to stay or adjourn the trial must be made, in the first instance at least, to the Superior Court rather than the Court of Appeal.

Next Pathway Inc. v. Informatica Inc., 2026 ONCA 657

[van Rensburg, Miller, Coroza JJ.A.]

Counsel:

P. Flaherty and Brendan Brammall, for the appellant (Next Pathways)
D. Charach and S. McKenzie, for the respondent (Informatica)

facts:

In early 2024, Informatica terminated a Service Agreement without paying the termination fee. Next Pathways alleged that at a meeting to discuss potential resolution, Informatica threatened to harm its business. Shortly after this meeting, Informatica also terminated a Migration Agreement.

Next Pathways brought the underlying action seeking damages for breach of contract with respect to both agreements, and for tortious conduct including intentional interference with economic interests and inducing breach of contract between Next Pathways and its clients.

Informatica sought to stay the proceedings in part, or dismiss the allegations related to the Migration Agreement on the basis that the claims related to the Migration Agreement were governed by the forum selection clause which provides that “any dispute must be brought in the Superior Court for San Mateo County, California.” The motion judge dismissed the motion.

issues:

1. Did the motion judge err in characterizing the Migration Agreement as a contract of adhesion then applying the doctrine of contra proferentem to resolve the ambiguity she found in that contract’s forum selection clause?

2. Did the motion judge err in failing to follow Pompey by holding that little weight ought to be placed on the forum selection clause because it was part of a contract of adhesion?

3. Did the motion judge err in her interpretation of the forum selection clause?

4. Did the motion judge err by failing to recognize that the Next Pathway engaged in “artful pleading” in order to get around the forum clause?

5. Did the motion judge err in failing to apply the “strong cause” prong of the Pompey test, and applying the conventional forum non conveniens analysis instead?

holding:

Appeal dismissed.

reasoning:

1. No.

The motion judge concluded that based on the wording the contract, in conjunction with the evidence of Informatica’s representative, signing the Migration Agreement was a pre-requisite for Informatica’s partners to access the “Migration Tool” (certain proprietary software) that was not specific to Next Pathway. She stated that this conclusion was supported by the evidence of the Next Pathway’s representative, who stated in her affidavit that the Migration Agreement was provided to Next Pathway on a “take it or leave it” basis, that she understood it was a standard form contract Informatica used for any company seeking to use its software, and that Next Pathway had no ability to negotiate or amend its terms. Informatica did not contradict these statements in its own affidavit evidence. Indeed, Informatica’s representative conceded that the Migration Agreement was a standard form contract.

Informatica pointed to an email following up on the request that Next Pathway sign the Migration Agreement by Docusign, which stated, “if you have any questions please direct to M.C.” The court does not agree that this was a clear indication that any part of the Migration Agreement, including the forum selection clause, could have been negotiated by Next Pathway. Nor did the fact that Next Pathway’s counsel did not question Informatica’s representative about whether the Migration Agreement was negotiable assist Informatica. Next Pathway was entitled to rely on the Informatica’s silence in response to the specific assertion in the affidavit of Next Pathway’s representative that the Migration Agreement was non-negotiable.

2. No.

In Pompey, the Supreme Court rejected the submission that little weight should be accorded to a forum selection clause in the subject contract which was asserted to be a contract of adhesion. The Supreme Court refused to invalidate the forum selection clause on that basis, also finding that, on the facts of that case, the forum selection clause could well have been negotiated. The Court did not read the motion judge as having concluded that the forum selection clause in this case should be given little weight because it was part of a contract of adhesion. Rather, having concluded that the Migration Agreement was a contract of adhesion, it was open to the motion judge to apply the principle of contra proferentem to resolve ambiguity in its interpretation.

3. No.

The motion judge found it significant that, in contrast to the language used in the Service Agreement, the clause in the Migration Agreement did not state it was conferring “exclusive” jurisdiction, and there was no assertion of attornment. Further, although the clause stated that it applied to “any dispute”, there was no definition of “dispute”. This was particularly important because of the claims asserted by Next Pathway in the action and the motion judge’s finding that “as pleaded the two Agreements and the terminations of both are ‘inextricably linked’” (a finding that is the Court found was unassailable).

The motion judge properly applied the Pompey test. At the first stage of that test, the party seeking a stay based on a forum selection clause must establish that “the clause is valid, clear and enforceable and that it applies to the cause of action before the court” (Facebook). The motion judge concluded that, giving the words of the provision their ordinary meaning, she was unable to find that the parties intended that any dispute arising from the Migration Agreement could only be brought in California. She concluded that the Migration Agreement did not clearly oust Ontario’s jurisdiction and, applying a commercially reasonable interpretation, that the forum selection clause must be read as non-exclusive.

4. No.

There was no merit to this submission. The motion judge characterized the claim regarding the termination of the Migration Agreement as a reprisal for requiring payment of the termination fee under the Service Agreement, a finding that was open to the motion judge on a plain reading of the Amended Statement of Claim.

5. No.

Given that the motion judge found that the Migration Agreement did not confer exclusive jurisdiction, the “strong cause” test did not apply in any event. Pompey requires the court to take into account all of the circumstances of the particular case when assessing whether the plaintiff has met the burden of establishing that the factual matrix presents the type of exceptional circumstances that justify a departure from the general principles that forum selection clauses will be enforced. While some of the factors identified by the motion judge would also be considered in a forum non conveniens analysis, they were relevant to the motion judge’s conclusion that “[b]ecause the case involves two agreements with interwoven factual circumstances, it makes commercial sense to have the matter litigated in one jurisdiction”, and that it would be unreasonable to disregard the negotiated forum selection clause in favour of one that was imposed by Informatica on Next Pathway.

L.B. c. Smalley, 2026 ONCA 659

[van Rensburg, Thorburn, and Gomery JJ.A.]

Counsel:

L.B., acting in person
M. Stevenson and R. Amarnath, for the Attorney General of Ontario
C. Willard and I. Corbeil, for the respondents Dr. Joshua George Smalley, Dr. Marina Moharib, Dr. Natasha Harris, Dr. Lisa Johnston, and Dr. Mitesh Patel

facts:

This decision is in French. The appellant brought a medical malpractice action on behalf of her minor daughter, L.M.B., against five physicians. The respondents took the position that L.M.B., as a minor, was a person under disability. They also argued that the appellant, as litigation guardian, was required to be represented by a lawyer under rr. 1.03, 7.01(5), and 15.01 of the Rules of Civil Procedure.

The appellant brought a constitutional challenge to those rules. She argued that they violated ss. 7 and 15(1) of the Canadian Charter of Rights and Freedoms and s. 96 of the Constitution Act, 1867 by denying her daughter access to justice, since no lawyer was willing to represent the appellant as litigation guardian. The Attorney General of Ontario intervened to defend the constitutionality of the rules.

The motion judge dismissed the constitutional challenge. She held that the rules, when properly interpreted, did not violate the Charter because they could be read as incorporating the court’s authority to assess whether the minor was capable of self-representation. The motion judge ordered the appellant to file evidence of L.M.B.’s capacity to self-represent or, alternatively, to seek representation from the Office of the Children’s Lawyer or the Office of the Public Guardian and Trustee.

Two motions came before the Court. The appellant sought an order requiring the appeal to proceed entirely in French, including requiring the Attorney General’s lawyers to plead and write exclusively in French. The Attorney General sought to quash the appeal on the ground that the motion judge’s order was interlocutory.

issues:

1. Was the appellant entitled to require the Attorney General’s lawyers to conduct the proceedings in French?

2. Was the motion judge’s order interlocutory, such that the Court lacked jurisdiction to hear the appeal?

holding:

Appellant’s motion dismissed. Attorney General’s motion to quash granted.

reasoning:

1. No.

The Court held that the Courts of Justice Act did not grant the appellant the right she claimed. Under ss. 125 and 126, a party to a bilingual proceeding was entitled to a bilingual judge, interpretation and translation. It did not require opposing counsel to plead in a particular language. The right to require the opposing party’s counsel to be bilingual existed only in the context of provincial offences prosecutions under s. 126(6). The Court applied the interpretive principle expressio unius est exclusio alterius (“the expression of one thing is the exclusion of the other”): the legislature’s decision to grant that right in provincial offences proceedings implied that it chose not to grant it in civil proceedings.

The Court also held that s. 5(1) of the French Language Services Act did not apply. That provision guaranteed the right to receive services in French from a government agency, but the Attorney General’s appearance in a civil proceeding to defend a constitutional challenge was not a “service” provided to the public within the meaning of the Act. The Attorney General was providing services to its client, the province. The Court further held that interpreting s. 5(1.1) as the appellant proposed would render s. 126(6) of the Courts of Justice Act superfluous.

The Court held that ss. 16(3) and 19 of the Charter did not provide the remedy the appellant sought. Section 16(3) was not a source of rights. Section 19 applied to federal courts and the courts of New Brunswick, not Ontario. The Court also rejected the appellant’s argument that the Attorney General’s lawyers were acting in breach of the Law Society’s Rules of Professional Conduct, since no law or constitutional principle gave the appellant the right she claimed.

Incidentally, the Court observed that at least one of the lawyers representing the Attorney General before the motion judge was bilingual and had presented oral argument in French on the appeal. The Court noted that it was difficult to understand why the Attorney General’s counsel would not have offered to communicate with the appellant in her mother tongue, and that such an offer would have highlighted the province’s commitment to promoting the use of French in the justice system and might have avoided the motion altogether.

2. Yes.

The appeal lay to the Divisional Court with leave. The motion judge’s order was interlocutory because it concerned the representation of persons under disability, did not ultimately determine the dispute between the parties, and dealt only with procedural rights. The Court held the appeal was accordingly within the jurisdiction of the Divisional Court, not the Court of Appeal.

Gutierrez v. Watchtower Bible and Tract Society of Canada, 2026 ONCA 665

[George, Copeland, and Gomery JJ.A.]

Counsel:

B.C. McPhadden and J. McKiggan, for the appellants
D. Elman and R. Stefanelli, for the respondent

facts:

The appellants were current or former members of the Jehovah’s Witnesses. They alleged that members of Jehovah’s Witness congregations sexually assaulted them as children. The sole named defendant, the respondent Society, was a federally incorporated not-for-profit corporation that owned and managed property used by Jehovah’s Witness congregations in Canada. The appellants claimed that the Society was directly or vicariously liable for the damages they suffered as children.

The appellants moved to certify the action as a class proceeding under the Class Proceedings Act, 1992 on behalf of all individuals who were sexually abused as minors by another Jehovah’s Witness, particularly appointed leaders known as Elders. The motion judge dismissed the certification motion for two overarching reasons. First, the motion judge found that the Canada Branch, an unincorporated association that oversaw the religious activities of Jehovah’s Witnesses in Canada, was a necessary party to the litigation, and the appellants’ failure to name its individual members was fatal. Second, the motion judge found that the appellants had failed to meet any of the criteria for certification under s. 5(1) of the Class Proceedings Act, 1992.

issues:

1. Did the motion judge err in refusing to allow the appellants to amend their pleading to add the necessary parties?

2. Did the motion judge err in finding that the appellants failed to meet the criteria for certification?

a. Did the amended statement of claim disclose a cause of action?

b. Did the motion judge err in finding that a class proceeding was not the preferable procedure?

3. Did the motion judge’s dismissal of the certification motion give rise to an injustice?

holding:

Appeal dismissed.

reasoning:

1. No.

The motion judge did not err in declining to adjourn the certification motion to permit the appellants to add the Canada Branch or its representatives as defendants. The Court noted that the appellants, although represented by experienced class counsel, did not seek leave to amend their pleading in their certification factum or in oral argument. In any event, the motion judge had determined that even had the Canada Branch been joined from the outset, the appellants still would have failed the criteria for certification. The decision to grant or deny an adjournment was discretionary, and the Court found no error in principle.

2. No.

The Court confined its analysis to two of the certification criteria: whether the amended statement of claim disclosed a cause of action and whether a class proceeding was the preferable procedure.

a. No.

The amended statement of claim did not disclose a cause of action in negligence, breach of fiduciary duty or vicarious liability.

The amended statement of claim did not allege any direct relationship between the Society and the minor children of Jehovah’s Witnesses, nor any facilities, services, or programs provided to minor children. No assaults were alleged to have occurred on property belonging to the Society or during events organized or overseen by the Society or Elders. The Court held that the case was readily distinguishable from institutional abuse cases such as Rumley v. British Columbia and Cloud v. Canada (Attorney General), where the institutions had a direct relationship with class members. Drawing on Cavanaugh v. Grenville Christian College, the Court held that spiritual authority alone was insufficient to ground a duty of care. Regarding the claim of breach of fiduciary duty, the Court used the same reasoning from Cavanaugh, holding that facts insufficient to establish proximity for a duty of care could not support a fiduciary relationship.

On vicarious liability, the Court held that even if the appellants could establish a sufficiently close relationship between the tortfeasors and the respondent, the amended statement of claim did not allege facts that would permit the appellants to prove the requisite connection between the tort and the tortfeasor’s assigned tasks. The Court distinguished John Doe v. Bennett, where the priest’s relationship with his victims arose in the context of activities he organized and controlled in his capacity as parish priest. There was no equivalent circumstance here.

b. No.

On the preferable procedure, the motion judge committed no reviewable error. The motion judge had found that individual issues trials were inevitable and that a common issues trial would be a “retardant to access to justice” rather than an aid. The motion judge drew on his own experience in Cavanaugh, where 14 years were consumed before individual issues trials commenced. The Court deferred to this determination, which attracted heightened deference.

The Court also rejected the appellants’ argument that a successful certification in Quebec (A. c. Watch Tower Bible and Tract Society of Canada) required certification in Ontario, noting that the Quebec criteria for certification were different from those under the Class Proceedings Act, 1992. A successful certification motion in Quebec did not guarantee certification in other provinces or vice versa.

3. No.

The motion judge’s comments in the costs endorsement about the Society’s litigation conduct did not contradict or undermine his conclusion that the Canada Branch was a necessary party. The motion judge had plainly stated that he would have dismissed the certification motion even had the Canada Branch been added as a party.

2069586 Ontario Inc. v. Sovereign General Insurance Company, 2026 ONCA 655

[Tulloch C.J.O., Sossin J.A. and O’Marra J. (ad hoc)]

Counsel:

K.C. Armagon, for the appellants
R. Andal, for the respondent

Keywords: Regulated Professions, Mortgage Brokers, Mandatory Insurance, Contracts, Insurance, Interpretation, Professional Errors & Omissions, Fraud Coverage, Ambiguity, Contra Proferentem, Civil Procedure, Boomerang Summary Judgment, Fresh Evidence, Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29, Mortgage Brokerages: Standards of Practice, O. Reg. 188/08, Mortgages Act, R.S.O. 1990, c. M.40, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Emond v. Trillium Mutual Insurance Co., 2026 SCC 3, SIR Corp. v. Aviva Insurance Company of Canada, 2023 ONCA 778, 1298417 Ontario Ltd. v. Lakeshore (Town), 2014 ONCA 802, Digby v. General Accident Fire and Life Assurance Corp. Ltd., [1943] A.C. 121 (H.L.), Laurence v. Davies, [1972] 2 Lloyd’s Rep. 231 (Crown Ct.), R&S Pilling t/a Phoenix Engineering v. UK Insurance Ltd., [2019] UKSC 16, [2020] A.C. 1025, 713860 Ontario Ltd. v. Royal Trust Corp. of Canada (1996), 27 O.R. (3d) 559 (Gen. Div.), 6874843 Canada Ltd. (Panamerican Mortgages) v. Ontario (Superintendent Financial Services), 2012 ONFST 23, Unique Broadband Systems, Inc. (Re), 2014 ONCA 538, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Sabean v. Portage La Prairie Mutual Insurance Co., 2017 SCC 7, Salah v. Timothy’s Coffees of the World Inc., 2010 ONCA 673, Co-operators Life Insurance Co. v. Gibbens, 2009 SCC 59, Scott v. Wawanesa Mutual Insurance Co., [1989] 1 S.C.R. 1445, National Bank of Greece (Canada) v. Katsikonouris, [1990] 2 S.C.R. 1029, Goudie v. Ottawa (City), 2003 SCC 14, Geoff R. Hall, Canadian Contractual Interpretation Law, 4th ed. (2020), Sir Kim Lewison, The Interpretation of Contracts, 8th ed. (2024), Oxford English Dictionary

facts:

The appeal concerned the interpretation of a Mortgage Broker Errors and Omissions Liability Policy issued by Sovereign General Insurance Company (“Sovereign”) to Aztec Financial Corp. (“Aztec”), a licensed mortgage brokerage. The appellants included C.C. and his two companies who were victims of a fraud committed by Aztec and its principal, BR. The appellants sought approximately $6.75 million in mortgage financing to purchase a student housing development property. Aztec introduced them to Community Life Projects Inc. as a potential lender; BR was also a principal of Community Life. As a condition of the proposed financing, the appellants paid C$459,975 to Aztec, to be held in trust and returned 19 days later. BR misappropriated most of the funds. The appellants obtained default judgment against Aztec and BR. After partial recovery through garnishment, $353,520.92 remained unpaid.

As a licensed mortgage brokerage, Aztec was subject to the Mortgage Brokerages, Lenders and Administrators Act, 2006 and the Mortgage Brokerages: Standards of Practice, O. Reg. 188/08 which required Aztec to carry regulator-approved E&O insurance with extended fraud coverage up to a minimum of $500,000 per occurrence. The regulator’s Guidelines mandated “additional coverage for loss resulting from fraudulent acts” to “protect the public” and guaranteed injured third parties a direct right of action.

Sovereign’s policy contained exclusions for dishonest or fraudulent conduct, personal profit and the loss of funds in the insured’s custody. However, the policy’s Ontario endorsement provided fraud coverage where an insured was legally liable to a third party for a “failure to advance or secure mortgage funds” as a result of dishonest or fraudulent conduct in the brokerage’s business. The endorsement acknowledged Aztec’s regulated status, defined covered professional services coextensively with the Mortgage Brokerages Act, and matched the Regulation’s mandatory $500,000 policy limit.

The appellants moved for summary judgment against Sovereign, relying on the fraud endorsement. The motion judge granted boomerang summary judgment to Sovereign, finding the endorsement did not apply. He adopted the definition of “mortgage money” from the Mortgages Act as “money or money’s worth secured by a mortgage” and concluded that because the appellants’ payment was not secured by a mortgage, it was “trust funds”, not “mortgage funds”.

issues:

1. When the policy is properly interpreted, does the endorsement cover the appellants’ loss?

2. If so, should the Court grant the appellants summary judgment?

holding:

Appeal allowed.

reasoning:

Issue 1: Yes. The Endorsement Grants Coverage for the Appellants’ Loss

1. The Governing Principles of Interpretation

There are three steps to interpreting insurance contracts: (1) clear intent, (2) general interpretive rules, and (3) contra proferentem.

First, the starting point was the language chosen by the parties, read in the context of the policy as a whole and the surrounding circumstances. Ordinary words are generally given the everyday meaning that the average person would expect in context. Second, general contract interpretation rules are applied to resolve the ambiguity. Those rules include the reasonable expectations of the parties and commercial reasonableness. Third, where ambiguity remains, contra proferentem becomes relevant. Coverage provisions are interpreted broadly, exclusions narrowly and unresolved ambiguity is construed against the insurer.

Step One: The Endorsement Unambiguously Granted Coverage

The motion judge erred at step one by reading the endorsement in isolation from its regulatory context. Once interpreted in light of that surrounding circumstance, the endorsement unambiguously granted coverage.

a. The Regulatory Context Was a Relevant Surrounding Circumstance

The step one interpretive analysis is holistic and contextual. These principles assumed particular significance here because this insurance was issued in satisfaction of a mandatory insurance requirement. Party intent to comply with the law was presumed, and this “sensible and straight forward rule” respected both party intent and regulatory policy. The case law confirmed this rule applied to insurance contracts. “Abundantly clear” language was needed to rebut the expectation of intent-to-comply.

The principle was particularly apposite where, as here, the contract existed because the governing regulatory regime required it: R&S Pilling t/a Phoenix Engineering v. UK Insurance Ltd. Sovereign insured a licensed Ontario mortgage brokerage required by provincial law to maintain E&O insurance that included extended protection against fraud. Breaching those requirements was an offence, and party intent to comply with them was expected absent clear language to the contrary. The endorsement demonstrated intent to comply. It acknowledged Aztec’s status as a regulated actor, defined covered professional services coextensively with Aztec’s regulated activity, matched the Regulation’s mandatory policy limit, and blocked Sovereign from reducing that limit without notifying the regulator.

This regulatory context was important not simply because of what the insurance requirement was intended to accomplish. Mortgage brokers occupied a position of significant financial trust: 713860 Ontario Ltd. v. Royal Trust Corp. of Canada (1996). Borrowers, lenders and investors transfer substantial amounts to a brokerage before a transaction closes and have little practical control over the funds once they enter the brokerage’s possession. The regulatory scheme responds through complementary protections: it requires funds to be held in trust and brokerages to maintain E&O insurance with extended fraud protection that fraud victims can directly enforce. The trust requirements seek to prevent misuse of client money. Mandatory fraud insurance addresses the consequences when prevention fails.

The insurance requirement serves more than the private interest of the insured brokerage. It has an important public-protection function. The regulator’s Guidelines promise direct recovery, guarantee “additional coverage for loss resulting from fraudulent acts”, and promise to “protect… the public”: 6874843 Canada Ltd. (Panamerican Mortgages) v. Ontario (Superintendent Financial Services). Mandatory E&O insurance does not transform the insurer into a guarantor of every loss caused by a mortgage broker. Coverage remains governed by the language of the policy and the regulatory scheme. But the public-protection purpose matters. Where the mandated fraud endorsement is reasonably capable of an interpretation that affords meaningful protection to the public, the regulatory purpose is a legitimate and important interpretive consideration and favours constructions that achieve that purpose over those that substantially defeat it.

b. Considering the Regulatory Context Was Mandatory

The Court held that since the regulatory context was a relevant surrounding circumstance, the motion judge was required to consider it at step one: Lakeshore.

First, no declaration of regulatory non-compliance was required. The appellants did not seek to have the policy invalidated or reformed. Their position was that the existing language should be interpreted consistently with the governing regulatory requirement. The latter was an orthodox principle of contract interpretation which applied to insurance contracts: Lewison. Second, it was unnecessary to prove that Sovereign subjectively knew of or notified the regulator of its intent to comply with the regulatory requirements. The interpretive context was objective, and intent to comply was presumed absent evidence to the contrary: Sattva Capital Corp. v. Creston Moly Corp. There was no such evidence here. Sovereign issued insurance to a licensed mortgage brokerage in a regulated Ontario industry. An insurer participating in a regulated market and issuing a policy designed to satisfy a mandatory provincial insurance requirement reasonably must be taken to know the requirements governing that insurance. Indeed, Sovereign’s own policy referenced them. It was, therefore, an error to treat the regulatory scheme as irrelevant unless the appellants called additional evidence to prove that Sovereign subjectively acknowledged it or specifically undertook to comply with it. Third, the regulator’s participation was not required. Fourth, the regulatory context was not a new issue on appeal. Finally, Sovereign’s assertion that it received regulatory approval to offer reduced coverage could not assist it. The material relied upon was not admitted into evidence before the motion judge and was not before the Court as fresh evidence.

c. The Regulatory Context Confirmed Unambiguous Coverage

Accounting for the incorrectly excluded regulatory context showed that the endorsement unambiguously granted coverage.

i. “Mortgage Funds” Include Mortgage-Related “Trust Funds”

The Court held that the central difficulty with the motion judge’s analysis was treating the characterization of the appellants’ money as “trust funds” as effectively answering whether they could fall within the mortgage-related protection of the endorsement, which he restricted to money secured by a mortgage. The Court concluded that this created a false dichotomy. “Mortgage funds” described the connection between the money and the regulated mortgage-related activity to which the endorsement applied.

The Court held that this interpretation of “mortgage funds” also matched the average person’s understanding. The endorsement is meant to benefit brokerage clients. Those clients would understand the funds they provide to their brokerages to obtain mortgages to be mortgage funds. The motion judge erred by instead adopting a more restrictive definition from a different statute. The meaning of “mortgage funds” matched the Mortgage Brokerages Act’s broader reach. That statute captured mortgage-making activity, not just existing mortgages. The Court held that this flexible definition of “mortgage funds” captured “trust funds” related to brokerages’ regulated mortgage-related activity.

The regulatory treatment of client money demonstrates why this distinction matters. Section 49 of the Regulation requires brokerages to hold funds received in the course of regulated mortgage-related activity as trust money. That obligation demonstrates that money received in connection with mortgage business may acquire the legal character of trust money while it remains in the brokerage’s possession. The Court held that this test was met here. The trust funds Aztec misappropriated were mortgage funds. The appellants approached Aztec for mortgage financing. They entrusted funds to Aztec because the mortgage transaction required it. Had there been no proposed mortgage financing, there would have been no trust payment and no trust arrangement. The Court concluded that the motion judge’s analysis effectively elevated the legal form in which the money was held over the commercial and regulatory transaction that explained why it was held at all. This was an error.

ii. Aztec’s “failure to … secure mortgage funds”

The Court held that the endorsement applied because Aztec failed to “secure” the mortgage funds it held in trust. In ordinary speech, to secure meant to “keep safe from danger, harm, or loss”, “secure”. Aztec failed to keep the mortgage funds safe from loss. Thus, the loss was covered.

Coverage would still exist under the motion judge’s narrower definition of “mortgage funds” as money secured by a mortgage. The trust funds were provided to Aztec for the purpose of securing mortgage financing for the appellants. Because Aztec dissipated those funds, it failed to secure the contemplated mortgage financing. There was, therefore, a direct nexus between the fraud, the failure to secure mortgage financing and the loss claimed.

The word “secure” is important. Its ordinary meaning includes to “succeed in obtaining” in addition to its protective sense described earlier: Oxford English Dictionary (online), “secure”. It necessarily encompasses the brokerage function of arranging mortgage financing in the first place. The term “advance” provides complementary protection by covering the next stage – the rollout of mortgage financing already obtained. The motion judge’s contrary interpretation, by requiring the relevant money itself already to be secured by a mortgage, substantially collapsed the distinction between “advance” and “secure” and narrowed the latter term precisely when it should perform independent work. Both concepts must be given meaning: Salah v. Timothy’s Coffees of the World Inc.

Step Two: General Rules of Contract Interpretation Confirm Coverage

The policy unambiguously granted coverage. But if any ambiguity remained, general contract-interpretation rules remove that ambiguity at step two.

a. Sovereign’s Interpretation Substantially Empties the Endorsement of Its Function

The Court held that an endorsement specifically providing fraud coverage could not be construed so narrowly that the policy’s general fraud and custody exclusions substantially consumed the protection the endorsement was intended to provide. Sovereign’s interpretation created that problem. Money held by a brokerage in trust was excluded because it was trust money rather than mortgage funds; fraudulent misappropriation was excluded because it involved dishonest conduct; and the loss of money in the brokerage’s custody was independently excluded because the brokerage possessed the money. The trust requirement and the mandatory fraud insurance would thereby operate at cross-purposes: the former would require the brokerage to protect client money by holding it in trust, while the latter would cease to respond because the money had acquired that legal status.

The practical consequence is particularly significant before a mortgage transaction closes. At that stage, clients may have entrusted substantial funds to the broker, but there may as yet be no registered mortgage and no mortgage proceeds capable of satisfying Sovereign’s narrower conception of “mortgage funds”. Yet, that is precisely the stage at which the broker is performing the work of attempting to secure the mortgage financing and at which client funds may be especially vulnerable to misappropriation. If the endorsement applied only after the relevant funds have themselves become secured mortgage proceeds, the word “secure” is deprived of much of its independent significance. The endorsement would afford little protection during the very stage of the transaction at which fraud involving entrusted client funds may occur. That result is difficult to reconcile with the language and function of an endorsement expressly providing coverage for a failure to “advance or secure mortgage funds”.

The Court held that it was also inconsistent with the principle that an insurance provision could not, absent clear language, be interpreted in a manner that removed coverage for losses characteristic of the risk against which the insurance was obtained: Ledcor, at para. 70. There was no such clear language here. The interpretation advanced by the appellants, by contrast, gives meaningful effect to both the fraud endorsement and the policy’s exclusions. The exclusions continue to operate generally, while the endorsement responds in the specified circumstances where an insured’s dishonest or fraudulent conduct results in a failure to advance or secure mortgage funds.

Accordingly, the parties’ reasonable expectations and commercial reality confirm the interpretation already reached at step one: the endorsement covers the appellants’ loss.

b. This Interpretation Does Not Overextend Coverage

The Court did not agree with Sovereign’s warning that a finding against it would convert the policy into general fidelity insurance for every fraudulent act committed by a mortgage broker. The endorsement does not apply merely because the wrongdoer happens to be a mortgage broker. There must be a sufficient connection between the insured’s fraudulent conduct and a failure to advance or secure monies linked to the brokerage’s regulated mortgage-related activity. That requirement preserves the policy’s E&O focus and prevents it from morphing into fidelity insurance. Whether that connection exists will depend upon the circumstances of the particular transaction.

In this case, the connection was direct. The appellants retained Aztec to secure mortgage financing. Aztec was required to hold the money in trust while carrying out that mortgage-broker function. Its principal misappropriated the money, and the financing was not secured. These circumstances fell within the language of the endorsement without converting it into unlimited fraud insurance.

Step Three: Contra Proferentem Confirms Coverage

The Court held that it was unnecessary to rely on contra proferentem because the policy unambiguously granted coverage and the ordinary principles of contract interpretation confirmed that conclusion. Nevertheless, if ambiguity remained, contra proferentem confirmed the result. Sovereign drafted or adopted the standard policy language and could have expressed the limitation it advanced in clear terms. Had Sovereign intended “mortgage funds” to mean only money already secured by a mortgage, or to exclude all money held in trust, it could have held so. It did not. As the party that “holds the pen”, it must live with the consequences. Second, the ambiguity arises in an endorsement clause issued in response to a regulatory requirement designed to afford fraud protection. An insurer should not obtain the benefit of an uncertain limitation on mandated fraud coverage where the competing reasonable interpretation both affords meaningful operation to the endorsement and conforms to the regulatory scheme.

Contra proferentem, therefore, reinforced, rather than created, the conclusion that the appellants’ loss fell within the endorsement.

Issue 2: Yes. Summary Judgment Remained the Appropriate Procedure

The Court agreed with the motion judge that this dispute was suitable for summary judgment. The relevant material facts were not genuinely disputed. The dispositive question was the interpretation of the policy. Just as the record permitted summary judgment in Sovereign’s favour if its interpretation were correct, it permitted summary judgment in favour of the appellants once the policy was properly interpreted.

Sovereign’s pleading also referred to alleged failures by Aztec and BR concerning notice, cooperation and other policy conditions, but those matters did not form the basis upon which the motion judge dismissed the action and did not provide an alternative basis for sustaining his judgment. Sovereign was required to “put its best foot forward” in response to the appellants’ summary judgment motion: Goudie v. Ottawa (City). It could not preserve a judgment founded upon an erroneous interpretation of the fraud endorsement by pointing to pleaded defences it did not establish on the summary judgment record.

Nor did Sovereign’s reliance upon the endorsement’s exclusion relating to a “creditor of any Insured” alter the result. The appellants’ claim was advanced as injured clients of the brokerage seeking compensation for misappropriated trust funds within the protection contemplated by the fraud endorsement, not as ordinary commercial creditors seeking payment of an unrelated debt. To read the creditor language otherwise would have risked defeating the contemplated third-party protection whenever the brokerage misappropriated client funds it was required to hold in trust.

SHORT CIVIL DECISIONS

De Longte v. De Longte, 2026 ONCA 656

[Miller, Trotter and Copeland JJ.A.]

Counsel:

M. De Longte, acting in person
L. M. Yates, for the respondent/responding party
A. Lei, for the intervener, J. Milne

Ishakis v. Solmon Rothbart Tourgis Slodovnick LLP, 2026 ONCA 661

[Fairburn A.C.J.O., Zarnett and Gomery JJ.A.]

Counsel:

J. Radnoff and A. Khan, for the appellant
R. Rai and N. Read-Ellis, for the respondents

Keywords: Contracts, Solicitor and Client, Assessments

Newton v. Grillo, 2026 ONCA 663

[Fairburn A.C.J.O., Zarnett and Gomery JJ.A.]

Counsel:

M. L. Grillo, acting in person
E. A. L. Newton, acting in person

Smith v. Oliphant, 2026 ONCA 662

[Fairburn A.C.J.O., Zarnett and Gomery JJ.A.]

Counsel:

D. L. Smith, appearing in person
M. Koyama, for the respondents M.O. and L.H.
D. Jamshidi, for the respondent Dri-Lec Building Services Inc.
No one appearing for the respondent, Staltari Mechanical Inc.

Keywords: Civil Procedure, Appeals, Leave to Appeal

Mazzeo v. Mazzeo, 2026 ONCA 674

[Huscroft, Trotter and Wilson JJ.A.]

Counsel:

M. J. Stangarone, T. Guo and N. Clyde, for the appellant
C. Tempesta and K. Bromley, for the Office of the Children’s Lawyer
S. Mazzeo, acting in person

Ramcharran v. Ramcharran, 2026 ONCA 678

[van Rensburg, Miller and Monahan JJ.A.]

Counsel:

C. Harris, for the appellants
S. S. Joshi, for the respondents

Keywords: Real Property, Resulting Trusts

Cycle Toronto v. Ontario (Attorney General), 2026 ONCA 676

[Fairburn A.C.J.O., Huscroft and Zarnett JJ.A.]

Counsel:

J. Hunter, C. Zwibel and E. Guilbault, for the appellants
A. Lewis, G. Hoaken, B. Murphy, C. Dunne, L. Beck and B. Roe, for the respondents
G. Avraam, J. Bernardo and R. Carroll, for the intervener Canadian Constitution Foundation
N. De Stefano, for the intervener Canadian Public Health Association
L. Century, A. Chen and U. Nageswaran, for the intervener Greenpeace Canada
V. Zbogar, M. Daniel and V. Sharma, for the intervener Four Our Kids – Toronto
M. Savard and C. Milne, for the intervener David Asper Centre for Constitutional Rights

Keywords: Municipal Law, Constitutional Law, Civil Procedure, Appeals, Costs, Highway Traffic Act, R.S.O. 1990, c. H.8, Cycle Toronto v. Ontario (Attorney General), 2026 ONCA 582

Alnwick/Haldimand (Township) v. Jarvis, 2026 ONCA 675

[Huscroft, Trotter and Wilson JJ.A.]

Counsel:

M. Pedersen, for the appellants
J. Savini and D. Querques, for the respondents

Keywords: Civil Procedure, Appeals, Costs, Corporation of the Township of Alnwick et al v. Jarvis, 2025 ONSC 5594

DiMartino v. Sediq, 2026 ONCA 683

[Huscroft, Trotter and Wilson JJ.A.]

Counsel:

M. J. Reid, for the appellants
P. M. DeMelo, for the respondent

Keywords: Contracts, Interpretation

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.

Court of Appeal Summaries (September 21 – September 25)

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Civil Decisions

Short Civil Decisions

CIVIL DECISIONS

SHORT CIVIL DECISIONS