The dispute produced mixed results on the merits. The court found that respondent unfairly disregarded applicant’s rights regarding timely disclosure of corporate financial information. But the court declined to appoint a receiver manager and instead issued targeted directions for the sale of the property at issue, including disclosure obligations, a right to use buy sell provisions, and a distribution waterfall for sale proceeds. The parties then could not agree on costs and filed written submissions.

On costs, the applicants argued that success was essentially divided. They pointed to the finding of oppression tied to delayed and denied access to records, and to success in moving the property sale forward while proceeds were held pending accounting. They submitted that, although some relief was denied, they prevailed on the most important disclosure and sale process issues.

The respondent, on the other hand, emphasized that he defeated numerous serious allegations of fiduciary breach, dishonesty and concealment. The applicants established only one oppression complaint related to timely financial disclosure. The respondent noted that the court endorsed proceeding with the property sale, with encumbrances paid before distribution, and argued the applicants unnecessarily prolonged the litigation. As a result, he sought partial indemnity costs. The corporate respondents similarly submitted that they were overwhelmingly successful on the disputes that drove the litigation and sought partial indemnity costs, with a reduction for two issues on which they were not successful.

Applying s. 131 of the Courts of Justice Act and r. 57.01, and guided by Boucher’s direction for a fair and reasonable approach rather than a formulaic one, the court weighed overall success, complexity and proportionality. It highlighted that only one act of oppression was found, that the respondents were more successful on the majority of issues, and that the requested appointment of a receiver manager was denied. Successful parties are presumptively entitled to partial indemnity costs, and the respondents’ requests fell within a reasonable range given two related applications and voluminous materials. The court fixed costs of $50,000 to the individual respondent and $50,000 to the corporate respondents.

The lesson is straightforward: calibrate the case to what is realistically provable and proportionate to the relief attainable. Where the record supports targeted remedies, such as discrete disclosure orders or refinements to a sale process, courts may grant that relief. But expansive theories and ambitious remedies must be justified. When the centre of gravity of a case lies in high stakes allegations that fail, modest wins will not insulate a party from adverse costs. Guttin’s costs ruling shows how overreach can turn partial successes into an overall loss.

In simple terms, the Court was tasked with reconciling two lower court decisions that looked at very similar wording in two employment contracts and came to different conclusions. In Baker, the motion judge had found that a termination without cause provision which allowed the employer to terminate the employee’s employment “at any time” was unenforceable because it had the potential to violate the Employment Standards Act (there are certain circumstances where, for a period of time, the employer cannot terminate an employee without cause, such as upon return from a maternity leave). That judge also found the “with cause” termination provision in the contract to be unenforceable.

In Li, the motion judge was also confronted with language that permitted without cause dismissal “at any time”, but found it did not violate the ESA because other language within the contract made it clear that the employer intended in all cases to comply with the ESA.

The Court of Appeal clarified that, while the interpretation of employment contracts engages a specialized analysis that considers the power imbalance inherent in the employer-employee relationship, contracts must still be read as a whole. The Court noted that the modern approach to contract interpretation involves a “practical, common-sense approach” that focuses on the objective intention of the parties in light of the words used and the surrounding circumstances.

Ultimately, the Court of Appeal held that the termination provisions in both employment contracts were enforceable. In Baker, this included both the without-cause and with-cause provisions; in Li, the Court upheld the without-cause provision challenged on appeal.

From this author’s review of the commentary on Baker and Li (particularly from employer-side lawyers) the focus seems to be that “common sense” has prevailed, and that overly technical or hypothetical-dependent interpretations of employment contract language advanced by employee/plaintiff counsel will now be rejected. This is probably correct.

However, an important part of the Court’s handling of these appeals is what it expressly did not address. Before the hearing, the appellant asked the Court to convene a five-member panel so that its earlier decision, Waksdale v Swegon North America Inc., could be revisited. In Waksdale, the Court of Appeal found that if a termination provision in an employment contract violates the ESA – even if it is not a provision being relied on by the employer to terminate – all of the termination provisions are invalidated and unenforceable. The Court declined to convene a five-member panel. Practically speaking, this means Waksdale remains good law in Ontario.

Although Waksdale is now six years old, there are still many, many Ontario employment contracts in effect that predate the decision. Of those, many will contain language that violates the ESA. Indeed, many contracts post-date the Waksdale decision and get something wrong.

As such, there is still room for advocacy in the interpretation of employment law contracts. Plaintiff-side advocates will continue to craft arguments as to why a termination clause is unenforceable. Employer-side advocates now have Baker and Li to rebut the outlandish arguments. But there remains an abundance of poorly drafted employment contracts sitting in dusty employee files in HR departments throughout Ontario. As long as that is the case, there will be room for good advocacy on both sides of a wrongful dismissal claim.

The Supreme Court of Canada in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (CanLII), established the framework for issue estoppel. This framework consists of two stages. The first stage requires that: 1. The same question was decided in prior proceedings; 2. The prior decision was final; and, 3. The parties, or their privies, were the same. The second stage requires the court to consider the overarching principle of ensuring justice is done. Even after the preconditions of stage one are met, the court retains discretion not to apply issue estoppel in stage two, where doing so would result in an injustice.

Cause of action estoppel arises where the cause of action alleged has been resolved in a previous proceeding. The Supreme Court of Canada in Patrick Street Holdings Ltd. v. 11368 NL Inc., Patrick Street Holdings Ltd. v. 11368 NL Inc, introduced nuance to the legal test for cause of action estoppel. The court articulated a four-part test to determine cause of action estoppel: 1. There must be a final decision of a court of competent jurisdiction in the prior action; 2. The parties to the later litigation must have been parties to, or in privy with parties to, the prior action; 3. The cause of action in the prior action must not be separate and distinct from the cause of action in the later proceeding; and, 4. The basis of the cause of action in the later proceeding must have been argued, or could have been argued, in the prior action if the parties had exercised reasonable diligence.

To properly consider the intersection of these two aspects of res judicata, we must first analyze the contradistinction. Ultimately, each doctrine restricts something. Cause of action estoppel bars a whole claim that was (or should have been) brought earlier, while issue estoppel bars a specific issue that was actually decided. In Patrick Street Holdings, the Supreme Court of Canada affirmed that trying to relitigate the same cause of action that was, or reasonably should have been, brought forth in previous proceedings, is an abuse of process. However, Issue estoppel, as articulated in Danyluk, asks whether the later proceeding is trying to relitigate a specific issue that was decided before.

In Middle East Bank v. Sabetyian, 2026 ONSC 1432 https://www.canlii.org/en/on/onsc/doc/2026/2026onsc1432/2026onsc1432.html argued by CP LLP’s Alastair McNish and Chit Leung, the Court held that the requirements for issue estoppel were not met. The Iranian proceedings (which the defendant asserted rendered the Ontario civil proceeding res judicata) addressed whether criminal charges should proceed, not whether civil liability existed. There was no prior trial or actual litigation of the civil issues. The court noted that the Iranian decisions were final only in the criminal sense and expressly left open the possibility of civil proceedings. Further, the bank was a complainant, but not formally a party to the criminal prosecution. This decision elucidates the distinction between factual overlap and true litigation overlap. Although the Iranian criminal complaint and the Ontario civil action arose from the same underlying facts, that overlap was insufficient to establish issue estoppel.

The Middle East Bank v. Sabetyian decision reflects the underlying purpose of these doctrines: fairness to both parties and the avoidance of injustice. On one hand, courts must protect defendants from being unfairly subjected to repeated litigation over matters that have already been finally determined. On the other hand, courts must also avoid unfairly depriving a plaintiff of its opportunity to have claims heard where those claims were not actually decided in the prior proceeding. In this case, allowing the action to proceed did not undermine finality or judicial economy because there were no prior civil findings to reopen.

Res judicata remains a powerful doctrine in Canadian civil procedure, though its application is not automatic. Courts must weigh the aim of shielding parties from enduring repetitive proceedings against the necessity of avoiding injustice. In essence, the doctrine of res judicata embodies the balance between finality and fairness that is central to Canadian civil procedure.

Please join my brief tour of these seven pillar concepts. If you are a lawyer, I hope it serves as a handy refresher; if you are not, this will provide a useful glimpse into several core principles of contract law.

1. Parties’ “objective” intention.

When interpreting a contract, the court ascertains the parties’ intention at the time of the contract. However, the catch-all term “intention” can mislead as it tends to invite an inquiry into what a party actually meant. Unlike criminal law, where “intention” frequently denotes a person’s subjective state of mind, in contract law, the court does not examine or excavate your inner thoughts. Its task is to determine intention on an objective basis: not what you intended, but what a reasonable person would conclude you intended based on the words used in the contract and, if there’s ambiguity in those words, the surrounding circumstances at the time of the contract that will provide context.

The distinction between a subjective and objective analysis is foundational and shapes other contract law principles: for example, after-the-fact conduct or interpretations by a party that are self-serving will likely be regarded as shedding little, if any, light on the parties’ objective intention at the time the contract is formed.

2. The word “offer” matters.

The word “offer” is used loosely in everyday conversation, but it carries real legal force that must not be underestimated. In the context of contract law, an offer goes beyond a mere suggestion or an invitation to continue negotiation. It is a proposal made on terms sufficiently definite that, once accepted, converts into a binding agreement. That may sound elementary, yet it is a distinction sometimes obscured in practice. One sees a letter in settlement discussions which states “my clients intend” or “propose” to “resolve the dispute as follows…”, when the sender in fact intended to simply “make an offer on the following terms”.

Achieving simplicity and clarity does not mean blindly rejecting more complicated conceptual variations when applicable. An offer can, for example, be conditional, with performance contingent on specified conditions being satisfied. The point is that we should avoid imprecise word choices or conceptual inflation that creates avoidable disputes on whether a contract was formed at all.

3. “Agreement to agree”.

Many lawyers have heard the maxim “an agreement to agree is not a contract”. As a shorthand, it is vivid; as a statement of law, it is inaccurate. The cases draw a finer line. The real question is whether the parties reached agreement on the essential terms and intended to be bound immediately upon their meeting of the minds, even if they also expected to sign a more formal document later to document the bargain that already exists. If so, the lack of the subsequent act of signing will not invalidate the contract. Furthermore, courts tolerate a measure of uncertainty where some missing details can be resolved by an objective standard, such as established practice or customs.

Conversely, if the parties clearly intended that no binding agreement would arise until a more formal contract was signed (for example by adopting the terminology “subject to contract” in their communications), there would be no binding agreement, even if at some point of the negotiation process the business terms appeared to have been agreed.

4. “You breached the contract, so I can now terminate it”.

That assumption is dangerously intuitive. Again, it is oversimplistic. In contract law, a breach does not automatically entitle the innocent party to elect to terminate the contract. Whether termination is available depends on factors such as the seriousness of the breach, and whether there are express provisions in the contract that govern any remedies flowing from the breach. (Such provisions may or may not be enforceable: see section 5, penalty clause, part B of this article). In sale of goods for instance, breaching a “condition” (a term regarded as essential to the bargain) may entitle the innocent party to terminate and pursue damages, whereas breaching a “warranty” will only result in damages.

The assumption is dangerous because if the contract remains alive, the innocent parties must still perform their contractual obligations. Decisions made in the heat of a contractual dispute should therefore be approached with a great deal of care. A wrongful attempt by an innocent party to terminate the contract, or failure to live up to their end of the bargain while still contractually obliged to do so, will itself amount to a breach of the contract, turning the innocent party into the wrongdoer.

(Part B of this article will move on to the concepts of penalty clause, “fundamental” breach, and repudiation – to be released soon).

The Ontario Court of Appeal’s decision in Schickedanz v. Schickedanz illustrates this burden in practice.

Elma Schickedanz signed a handwritten codicil on May 9, 2016, purporting to leave the family’s “home farm” to her daughter, Charlotte, instead of the equal division set out in Elma’s 2007 lawyer-drafted will. At her death, the home farm’s value was estimated at $20,000,000 and represented most of Elma’s wealth.

There was no dispute between the parties that the purported codicil met the formality requirements for a holograph (that is, handwritten) will. Suspicious circumstances can arise, however, from the making of the document. This can include the testator’s condition, or the presence of a significant beneficiary at the time of creation. The trial judge found suspicious circumstances tied to Elma’s knowledge and approval, and to capacity, shifting the burden to Charlotte to prove both requirements.

Charlotte, the sole beneficiary of the codicil, played an instrumental role: she discussed Elma’s wishes beforehand, retrieved the paper, reviewed the document, accompanied Elma to notarize it, and arranged for its safekeeping. Additionally, the codicil was prepared without any lawyer or advisors and without notifying Elma’s sons.

Health and cognition matter. When the codicil was executed, 85‑year‑old Elma had serious health issues, including a brain growth, fainting episodes, congestive heart failure, sciatica, anxiety, depression, memory loss, and mild cognitive impairment. Weeks later she was diagnosed with early dementia with repeating confusion. The day after signing, Elma told her son Arthur that she had “did something yesterday” she was “unsure about,” but affirmed that she and her late husband wanted to treat their children equally.

On these facts, the trial judge held that Charlotte failed to prove Elma’s knowledge and approval and failed to prove capacity. The judge concluded that the evidence did not show that Elma appreciated that the home farm constituted the bulk of her estate or that gifting it would upend her longstanding equal‑treatment intention. The Court of Appeal dismissed Charlotte’s appeal, holding there was ample evidence of suspicious circumstances and no legal error in the trial judge’s analysis.

In Ontario, a Will can be challenged where the person who made it was effectively coerced into signing, such that the document reflects someone else’s wishes, not the testator’s. That is exactly what the court found in Abbruzese v. Tucci, a case that offers practical guidance for families and estate trustees dealing with allegations of undue influence.

The story behind the dispute

Maria and Carlo Ianerrelli immigrated to Canada from Italy in the early 1960s. They lived in a jointly owned home on McLeod Avenue in Toronto and had two daughters, Angela and Bernadette. Carlo died in 2005 and Maria remained in the home. In 2009, after separating from her second husband, Bernadette moved in with Maria. In 2007, Maria made a Will that left her house to both her daughters. In 2016, she changed course: she made Bernadette the sole executor and transferred title to the house into joint names with Bernadette.

Maria died in 2018 at age 88. After learning of the 2016 Will and the transfer of the home, Angela brought a court application challenging both. She alleged that Maria lacked the required mental capacity and that Bernadette had exercised undue influence over her mother.

How courts assess undue influence in Will challenges

After hearing evidence from both fact witnesses and expert witnesses, the court applied the factor-based approach described in Gironda v. Gironda. In plain language, the question is whether the beneficiary exercised an “overbearing” influence that displaced the testator’s free will. The court looks at the full context, including vulnerability, dependence, isolation, and whether the estate plan changed in an unexpected way.

What the court found in Abbruzese v. Tucci

The evidence showed that Maria was afraid of being alone and increasingly dependent on Bernadette for day-to-day living. Maria could not use the phone on her own. When she did speak with Angela—with the help of her grandson Joey—she would end the call quickly when Bernadette returned. Although there was no explicit threat that Bernadette would abandon Maria if she refused to change her estate plan, the court concluded Maria effectively had no meaningful alternatives and felt compelled to do what Bernadette wanted.

Justice Gilmore concluded that Bernadette had exercised “overbearing power” over Maria and that the 2016 Will was the product of undue influence.

Need advice? If you are considering a Will challenge, or defending one, timely legal advice can make a difference. Contact CP LLP to discuss the options, evidence, and court process that may apply in your situation.

Common red flags that can indicate undue influence

• A sudden change from a long-standing estate plan (especially where one child is unexpectedly excluded).
• A major transfer of assets before death (for example, putting a home into joint names).
• Growing dependence on the main beneficiary for care, transportation, meals, or communication.
• Isolation from other family members or friends, including controlled phone access and “supervised” visits.
• The beneficiary arranges the lawyer and is involved in appointments, instructions, or communications.
• Explanations for changes that sound rehearsed, inconsistent, or out of character for the testator.

If any of these issues are present, it is worth getting advice early. Undue influence and capacity cases are evidence-driven: key witnesses, medical records, solicitor notes, and the timeline of events often determine the outcome.

This article is provided for general information only and is not legal advice. Every situation turns on its own facts.

The Gironda factors (and how they played out here)

• Dependence on the beneficiary (emotional/physical needs): Maria was increasingly dependent on Bernadette, particularly after her PMR diagnosis. By 2016, the evidence suggested Maria’s day-to-day functioning was significantly limited.
• Social isolation: The evidence included refusals of outside care, discouragement of visitors, restricted communication with Angela, and Bernadette’s consistent presence during visits.
• Recent family conflict: The court considered the broader family dynamics and tensions relevant to how influence could be exerted.
• Recent bereavement: Maria’s husband’s death in 2005 had a lasting impact that affected her vulnerability over time.
• Substantial pre-death transfers to the respondent: Maria transferred the bulk of her estate by placing the home into joint names with Bernadette in 2016, putting significant assets under Bernadette’s control before death.
• A new Will inconsistent with prior Wills: The 2016 Will departed from the 2007 Will, which had treated both daughters as beneficiaries of the home.
• No clear explanation for unexpectedly excluding a family member: The reasons given for the change were treated as unpersuasive; the court found the explanations appeared repeated in a “programmed” manner (as characterized in the evidence).
• Use of a lawyer previously unknown to the testator and chosen by the respondent: The evidence showed the lawyer involved was not Maria’s prior solicitor and that the meeting was arranged through Bernadette’s connections; the court also inferred Maria was coached on what to say and do in her interviews.

The Court of Appeal recently applied that same kind of practical approach in the interpretation of a commercial lease.

In Convocation Flowers Incorporated v. Anisa Holdings Ltd., 2026 ONCA 145, the Court upheld an application judge’s decision that the landlord repudiated the lease by cutting off the tenant’s access to loading docks, even though the lease did not explicitly give the tenant the right to use those loading docks.

When it initially leased the space, the tenant had negotiated an agreement with the former landlord to enlarge certain loading docks at the commercial property. That agreement was included as a schedule to the lease. When a new landlord bought the property, it wanted to use those loading docks for its own business, and notified the tenant that its access was being cut off.

The landlord relied on a clause in the lease that it could establish rules and regulations governing use and occupancy of the premises, including common areas, in its sole discretion. The loading docks and the driveway leading to them were part of the common areas. Most significantly for the landlord’s position, there was nothing in the body of the lease that said the tenant was guaranteed a right to use that part of the property.

The Court of Appeal agreed with the application judge’s interpretation of the lease as a whole in a commercially reasonable manner. The fact that the prior landlord had agreed to expand the loading docks so the tenant could operate its flower distribution business meant that, even if some parts of the lease gave the landlord discretion to alter the common areas, it could not do so in a manner that would alter or eliminate the tenant’s use of those negotiated improvements to the loading docks.

By doing so, the landlord fundamentally breached the lease, amounting to a repudiation that the tenant could accept and treat the lease as being terminated. That meant the tenant was in the right to move out and sue for damages.

Add this decision to the body of contractual interpretation cases where the principle of “interpreting a contract as a whole in a commercially reasonable manner” is clearly another way of saying, apply common sense.

https://www.canlii.org/en/on/onsc/doc/2026/2026onsc1544/2026onsc1544.html

A recent Court of Appeal decision addresses an interesting (no pun intended) interest provision in a mortgage agreement that the trial judge had found to violate section 8 of the Interest Act. In Rabinowitz v. 2528061 Ontario Inc., 2026 ONCA 21, the Court of Appeal considered a mortgage agreement relating to a vacant property that a purchaser intended to develop. In response to a request by the purchaser for an extension of the closing date to allow for additional due diligence, the vendor requested a loan of $600,000. The loan was secured by a mortgage on the property, with the intention that the funds would be credited toward the purchase price. Regarding interest, the mortgage agreement provided as follows:

“The Interest Rate of the Charge shall be 0% until the Balance Due Date on July 10, [2018]. Beginning July 10, [2018], the Interest Rate of the Charge shall be 12.0%, calculated monthly, not in advance, until the payment of the Charge in full.”

At trial, the court found that the jump in interest from zero to 12% on the balance due date meant that interest would only be payable if the principal was not paid, i.e. upon a default. Accordingly, the provision violated the Interest Act. The Court of Appeal granted the purchaser’s appeal of this finding. Relying on the settled law that ordinary commercial contracts must be interpreted in accordance with their plain language as understood by a reasonable business person, the Court emphasized the significance of the interest rate commencing prior to the mortgage being in default (July 10th, rather than July 11th), and the fact that the interest-free period was premised on the completion of the purchase agreement. Once the sale did not close, the mortgage became a standalone agreement, with interest at 12%, as the parties agreed with the benefit of legal advice.

Although the facts of the Rabinowitz decision are unique, the importance the Court of Appeal placed on the timing of the increase in interest – before a default – serves as a reminder of the limited application of section 8 of the Interest Act. It only applies to prevent lenders from increasing the interest burden on mortgage arrears above the rate payable on principal money not in arrears. If a lender negotiates for the interest rate to jump just before a default (and as late as the due date for repayment of principal), the Court of Appeal has signaled such a provision will be enforceable.