Court Of Appeal Summaries (October 27 – 31, 2025)

Good afternoon.
Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of October 27, 2025.

In Cameron Stephens Mortgage Capital Ltd., v. Conacher Kingston Holdings Inc., the Court decided a dispute over whether a court-appointed receiver could re-open a real estate auction after receiving a significantly higher late offer. The appellant had entered into an agreement to purchase the property, but before court approval, a new bidder submitted an offer that was 37% higher. The motion judge declined to approve the appellant's sale and instead ordered a brief extension of the bidding process to ensure creditors received maximum value. The appellant argued on appeal that the judge misapplied the Soundair principles, but the Court upheld the decision, finding that re-opening the process was fair, reasonable, and consistent with insolvency law objectives.

Adewale v. Royal College of Physicians and Surgeons of Canada was a breach of contract action brought by a group of internationally trained doctors who initially achieved passing grades on the Royal College's psychiatry certification exam but failed following a 6.5% downward "psychometric adjustment". The Court allowed the appeal, finding the trial judge's reasons insufficient and directing a new trial before a different judge. Specifically, the trial judge failed to address the core breach of contract arguments and did not adequately explain why she preferred the Royal College's expert evidence over the expert evidence called by the licensing candidates.

In International Capital Management Inc. v. Optimize Inc. (Optimize Wealth Management) the Ontario Court of Appeal dismissed an appeal in a breach of contract case. The appellants had been found liable to repay non-competition fees paid to them by the respondent after it was determined that they breached the non-competition covenant under which the fees were paid. The Court confirmed that the provision requiring repayment of the fees was a forfeiture clause, not an unenforceable penalty, and found no unconscionability.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

CIVIL DECISIONS

International Capital Management Inc. v. Optimize Inc. (Optimize Wealth Management), 2025 ONCA 741

[Huscroft, Coroza and Monahan JJ.A.]

Counsel:

McLennan, for the appellants

Tomasich and E. Dillon, for the respondent

Keywords: Breach of Contract, Restrictive Covenants, Non-Competition, Enforceability, Forfeiture, Penalties, Peachtree II Associates – Dallas L.P. v. 857486 Ontario Ltd. (2005), 76 O.R. (3d) 362 (C.A.)

facts:

The appellants, the Sanchez brothers, founded the appellant International Capital Management Inc. ("ICM"). In 2017, ICM entered into two agreements (the "Agreements") with the respondent, Optimize Inc. ("Optimize") whereby ICM sold its portfolio of clients to Optimize. The first was a referral agreement, and the second was a non-competition agreement.

Pursuant to the Agreements, Optimize was obligated to pay monthly non-competition fees to ICM. However, Optimize would be entitled to a refund of these fees if more than 15% of the value of the assets transferred to Optimize under the Agreements were subsequently transferred away from Optimize to entities related or associated with ICM or the Sanchez brothers.

Optimize claimed that over 15% of the value of the initial portfolios was transferred to TIP Wealth Manager Inc. ("TIP"), another wealth management firm associated with the Sanchez brothers. Optimize subsequently sent a notice that it was terminating the agreements and demanded repayment of the fees paid to ICM. ICM then initiated an action to declare the Agreements were valid and binding and damages, in response to which Optimize counterclaimed. The motion judge granted Optimize's counterclaim and dismissed the appellants' action.

issue:

1. Did the motion judge err in finding there was no genuine issue requiring a trial?
2. Did the motion judge err in finding that the stipulated remedy clause in the Agreements was a forfeiture clause?

holding:

Appeal dismissed.

reasoning:

1. No. The Court found no error in principle or any misapprehension of the evidence in the motion judge's reasons. Moreover, the motion judge's conclusion was supported by the appellants' own evidence tendered at the motion.

2. No. The Court found no error in the motion judge's analysis, as it was entirely consistent with the approach of the court in Peachtree II Associates – Dallas L.P. v. 857486 Ontario Ltd. As stated in Peachtree, courts should, whenever possible, favour analysis on the basis of equitable principles and unconscionability over the strict common law rule pertaining to penalty clauses. They should also, if at all possible, avoid classifying contractual clauses as penalties and, when faced with a choice between considering stipulated remedies as penalties or forfeitures, favour the latter.

Adewale v. Royal College of Physicians and Surgeons of Canada, 2025 ONCA 738

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

Counsel:

MacKenzie and B. MacKenzie, for the appellants

Gibbs and S. Iantomasi, for the respondent

Keywords: Regulated Professions, Psychiatrists, Licensing, Civil Procedure, Procedural and Natural Justice, Insufficiency of Reasons, Expert Evidence, Medicine Act, 1991, S.O. 1991, c. 30, Registration, O. Reg. 865/93, s. 3, Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 134(1), 134(6), Rules of Civil Procedure, r. 14.05(3)(h), Levac v. James, 2023 ONCA 73, Champoux v. Jefremova, 2021 ONCA 92, Longo v. MacLaren Art Centre, 2014 ONCA 526, Willick v. Willard, 2023 ONCA 792, Earl v. McAllister, 2021 ONSC 4050 (Div. Ct.), 778938 Ontario Limited v. EllisDon Corporation, 2023 ONCA 182

facts:

This appeal emerged from litigation relating to the licensing process for internationally trained doctors seeking certification to practice independently as psychiatrists in Canada. The appellants were a group of licensing candidates who failed the 2020 psychiatry licensing exam and sued the Royal College of Physicians and Surgeons of Canada (the "Royal College") after learning that every examinee's test score had been adjusted downward by 6.5%. Each appellant had received an initial grade exceeding the passing score of 70% but ended up failing following psychometric adjustments lowering all candidates' scores. On its website, the Royal College indicated the 70% passing score for the psychiatry exam, and in the Frequently Asked Questions section denied that exams would be graded on a bell-curve. The FAQs simply stated that an in-depth post-exam analysis would ensure that the exam was "criterion-referenced," though this term was not defined. Another section of the website explained that exam questions might be deleted during this process if they did not meet psychometric standards. The appellants had fulfilled all other aspects of the licensing process. In 2020, this involved paying $4,415 for the written exam and submitting a letter from a clinical supervisor attesting the candidate's fitness to practice psychiatry without supervision. The usual clinical/oral component of the exam was cancelled due to pandemic lockdowns.

In January 2021, the appellants brought this proceeding as an application, later converted to an action on consent. In their statement of claim, the appellants pleaded that an express or implied contract existed between licensing candidates and the Royal College, which was breached when the Royal College failed to grade the psychiatry exam in accordance with its own guiding principles. They further asserted that the Royal College breached its duty of good faith and honest contractual performance, causing the appellants to receive failing scores when they should have passed. By way of relief, the appellants sought a declaration that they passed the 2020 qualifying exam for independent psychiatric practice and were entitled to certification.

A three-day summary trial was conducted. Each party called at least one expert witness, Dr. Ali for the appellants and Drs. Boulet and Bhanji for the Royal College. All experts were cross-examined in court. In written pretrial submissions, the appellants asserted that the central issue in dispute was whether the Royal College's 6.5% lowering of their exam scores was psychometrically sound. They claimed the adjustment was arbitrary and without statistical justification. In response, the Royal College asserted that the action was essentially an attack on the soundness of the organization's grading system, submitting that the court should not step into its shoes and declare that the appellants passed the exam. The trial judge agreed with this submission in dismissing the action, holding that the Royal College's grade adjustment had been psychometrically justifiable and that it was not the court's place to essentially regrade the exams.

On appeal, the licensing candidates contended that the trial judge's reasons were insufficient, primarily because she did not address the cause of action (breach of contract), she provided no reasons for preferring the evidence of the Royal College's experts, and she failed to grapple with the central question of whether the 6.5% score reduction was arbitrary or justified. Moreover, the appellants submitted that the trial judge failed to decide the case impartially since much of her reasons consisted of copied and pasted extracts from the agreed facts and the Royal College's submissions. The Royal College refuted these arguments, contending that the trial judge carefully considered evidence and submissions in reaching her conclusion.

issue:

Were the trial judge's reasons insufficient, such that her decision should be set aside?

holding:

Appeal allowed.

reasoning:

Yes. The Court set aside the trial judgment due to the insufficiency of the trial judge's reasons and directed a new trial before a different judge. The trial judge erred in failing to address key issues arising from the parties' submissions, including whether an enforceable contract existed between the candidates and the Royal College, its terms, and whether it was breached. She also did not address the appellants' submissions that a declaration that they passed the exam was an available remedy for breach of contract. Though much of the parties' submissions focused on the competing expert evidence, the trial judge was obliged to adjudicate the case through the lens of breach of contract, the only cause of action asserted in the pleadings.

Relying on Champoux, the Court affirmed that a trial judge's reasons must provide insight into how the ultimate legal conclusion was reached. In cases involving competing experts, trial judges must explain, in some detail, why they preferred one expert's evidence over another. The Court held that in concluding that the grade reduction was psychometrically sound and free of errors, the trial judge failed to meaningfully engage with available expert evidence. Her treatment of the expert evidence largely consisted of detailed summaries of each side's opinions. The trial judge noted that Dr. A. testified that the Royal College had not used a criterion-referenced methodology, as advertised on its website, but had instead adopted a norm-referenced method, performing a bell-curve on the exam. Conversely, Dr. Bh. opined that the exam was criterion-referenced and not bell-curved, though informed by normative data, and Dr. Bo. asserted that the Royal College's psychometric review reflected best practices. Despite setting out the expert evidence, the trial judge failed to explain how she had resolved contradictions between the experts' views. Instead, she merely stated that she accepted and preferred the Royal College's factual assertions, including the evidence of Drs. Bh. and Bo. Hence, the trial judge committed the same error as the judge in Champoux, neglecting to explain why she endorsed the Royal College's submissions that the altered exam scores were psychometrically justified.

Having concluded that the trial judge's reasons were insufficient, the Court did not consider the appellants' contention that the trial judge erred because her reasons were made up almost entirely of copied sections from the parties' submissions. The deficiencies in the trial reasons justified a new trial, with the Court declining to retry the issues based on the existing record. It was not in the interests of justice for the Court to decide this legally and factually complex case on a paper record. The appellants were entitled to a reasoned decision by a new trial judge, particularly given the importance of the claim for the appellants who had trained for years with the goal of eventually practicing independently as psychiatrists in Canada.

The principles of interpreting court orders

The motion judge stated that the parties agreed on the principles of interpretation for a court order and instructed herself to consider the text, context and purpose of the order, based on the express language of the order, the purpose of the terms of the order, the authority to make the order, the broader context within which the order was granted, and resolving apparent inconsistencies. The Court agreed that these were applicable principles and added that a reviewing court must apply accepted principles of statutory and contractual interpretation to ascertain the intent of the ordering judge. This meant using the text as the anchor of the interpretive exercise. However, it did not mean focusing on sometimes ambiguous text to the exclusion of context and purpose. Where a holistic consideration of text, context, and purpose nevertheless yields ambiguity, court orders, like statutes, should be interpreted in a manner that preserves a party's right to sue.

Cameron Stephens Mortgage Capital Ltd. V. Conacher Kingston Holdings Inc., 2025 ONCA 732.

[Miller, Paciocco and Coroza JJ.A.]

Counsel:

Kulathungam, for the appellant AA, in Trust for a Company to Be Incorporated

H. Greenspoon-Soer, for the respondent Cameron Stephens Mortgage Capital Ltd.

Sparano, for the respondents YB and 2462686 Ontario Inc.

Dennis and P. Rooney, for the respondents AJGL Group Inc. and 1001079582 Ontario Inc.

Larry and R. Shah, for the receiver TDB Restructuring Ltd.

L. Byers and K. Wasielewsky, for the respondents IS and 2858087 Ontario Inc.

D. Wajs, for the interested party RB

Keywords: Real Property, Bankruptcy and Insolvency, Receiverships, Sales Processes, Offers, Approval, Civil Procedure, Appeals, Leave to Appeal, Bankruptcy and Insolvency Act, RSC 1985, c B-3, s 193(c), Royal Bank of Canada v. Soundair Corp., 1991 CanLII 2727 (ONCA), Ravelston Corporation Limited (Re), 2007 ONCA 135, Marchant Realty Partners Inc. v. 2407553 Ontario Inc., 2021 ONCA 375 (CanLII), Bank of Canada v. Regal Constellation Hotel (Receiver of) (2004), 71 O.R. (3d) 355 (C.A.), Reciprocal Opportunities Incorporated v. Sikh Lehar International Organization, 2018 ONCA 713, Peakhill Capital Inc. v. 1000093910 Ontario Inc., 2024 ONCA 584, 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, North House Foods Ltd. (Re), 2025 ONCA 563, Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, 462 D.L.R. (4th) 228, Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282.

facts:

AA entered into an Agreement of Purchase and Sale with a court-appointed receiver to purchase a debtor's real estate property on Islington Avenue in Toronto. The Receiver, TDB Restructuring Limited, had been appointed on December 6, 2023, at the request of a secured lender, Cameron Stephen Mortgage Capital Inc., which held a mortgage of over $15 million registered on the property owned by AJGL Group Inc.

Over the course of eight months, the Receiver conducted a sales process. It invited eight commercial real estate brokers to submit marketing proposals and ultimately entered into a listing agreement with Colliers Macaulay Nicolls Inc. Colliers listed the property on March 25, 2024, and carried out an extensive marketing campaign, sending the listing to approximately 3,000 parties. Although offers were received, Colliers could not close a sale. Consequently, the property was re-marketed beginning August 29, 2024.

On October 7, 2024, the Receiver entered into an APS with AA, subject only to court approval. AA completed due diligence, waived all conditions, and awaited approval. The Receiver then brought a motion seeking court approval of the sale, which was scheduled for December 4, 2024.

On December 3, 2024, a third party—1001079582 Ontario Inc., a wholly owned subsidiary of AJGL—submitted two new offers that were 6.7% and 14.2% higher than AA's offer. The Receiver advised the court that these late offers were not "substantially higher" but acknowledged that the court could exercise discretion to consider them. The Receiver did not disclose actual prices, only percentage differences.

When the motion was heard on December 4, 2024, the motion judge adjourned the matter to December 10 due to the last-minute offers and permitted new bids by December 9. On December 6, 2024, 100 Inc. submitted a third offer, which was 37% higher than AA's offer.

At the December 10 hearing, the Receiver presented an alternative position, maintaining support for AA's transaction but recognizing that the significant price difference might justify re-opening the bidding. The motion judge declined to approve the sale to AA and ordered that the auction process be re-opened for six days—from December 10 to December 16, 2024—to allow all previous bidders, including AA and 100 Inc., to submit new bids.

The motion judge found that while the Receiver's conduct had been proper and the sales process sound, the 37% higher offer rendered AA's deal potentially improvident. To ensure fairness, the judge ordered that if AA was not the successful bidder after the re-opened process, AJGL would reimburse his reasonable legal costs.

AA appealed the order, and the auction process was automatically stayed upon filing the appeal.

issues:

1. Did the appellant have an automatic right of appeal?
2. Did the motion judge misapply Soundair principles in re-opening the bidding process after receiving a substantially higher late offer?
3. Did the Receiver improperly disclose the appellant's confidential bid price?
4. Did the motion judge err in granting standing to the respondent 100 Inc.?

holding:

Appeal dismissed.

reasoning:

1. No

The Court first addressed whether the appellant, AA, had an automatic right of appeal under section 193(c) of the Bankruptcy and Insolvency Act (BIA). That provision allows an appeal as of right only where the order appealed from is not merely procedural, involves property exceeding $10,000 in value, and results in a loss to the appellant. The Court noted that this provision has been interpreted narrowly in Bending Lake Iron Group Limited and reaffirmed in North House Foods Ltd. (Re). Applying this standard, the Court found that the motion judge's order was procedural in nature. It did not finally dispose of the property or determine any party's substantive rights. Rather, it simply directed the manner in which the sale process would proceed by re-opening the auction for a brief period to permit new bids. Because the order did not itself cause any loss or engage the value of the debtor's property, it was a procedural step rather than a final adjudication. Therefore, AA did not have an appeal as of right under section 193(c).

However, the Court exercised its discretion to grant leave to appeal under section 193(e) of the BIA. The appeal raised an issue of general importance to receivership practice, namely, whether a late and substantially higher offer, standing alone, could justify re-opening a sales process. The question was arguable and of significance beyond the immediate parties, and hearing the appeal would not unduly delay the insolvency proceedings. Accordingly, the Court concluded that leave to appeal was warranted.

2. No.

The principal issue on the merits was whether the motion judge erred in re-opening the bidding process, thereby misapplying the well-established principles from Royal Bank of Canada v. Soundair Corp. (1991). Under Soundair, a court reviewing a receiver's proposed sale must consider four factors: (1) whether sufficient effort was made to obtain the best price and whether the receiver acted improvidently; (2) the interests of all parties; (3) the efficacy and integrity of the process by which the offers were obtained; and (4) whether the process was unfair. These principles are flexible and context-specific, and decisions of commercial judges supervising receiverships are entitled to substantial deference, as emphasized in Ravelston Corporation (Re) and Marchant Realty Partners Inc. v. 2407553 Ontario Inc.

Applying these principles, the Court found that the motion judge acted within his discretion. Although he acknowledged that the receiver's conduct and sales process were flawless, he reasonably concluded that the emergence of a late offer 37% higher than AA's bid created a real risk that the initial sale was improvident. The motion judge was entitled to find that such a significant price differential could not be ignored in fairness to the creditors. With respect to the interests of the parties, the motion judge recognized that re-opening the process was contrary to AA's interest in finality, but found that the creditors' interest in maximizing recovery was paramount. Regarding the integrity of the process, the judge carefully considered that late offers can undermine predictability in receiverships, but found that the facts here were "unique and unlikely to be replicated."

The receiver itself had proposed re-opening the bidding as an alternative remedy, which mitigated concerns about unfairness or instability. Finally, to address any prejudice to AA, the motion judge ordered that if AA did not remain the successful bidder, the property owner, AJGL, would reimburse his reasonable legal costs. This was a fair and practical measure to preserve equity between the parties. Taken together, the Court concluded that the motion judge properly applied the Soundair principles and that his decision deserved deference.

3. No

AA also argued that the process was unfair because the receiver disclosed confidential information when it revealed the percentage differences between his offer and the late offers in its factum. The Court rejected this claim.

The order appointing the receiver expressly authorized it to disclose information relating to the property and receivership as it deemed appropriate. In this context, the receiver's decision to disclose only percentage differences, rather than actual dollar figures, was a reasonable way to balance confidentiality with the court's need for transparency. The disclosure did not reveal the exact amounts of the bids to the public or to new bidders; only AA and 100 Inc. could deduce the figures. Moreover, this was not a situation where a late bidder strategically used confidential information to outbid another party by a narrow margin. The third offer was 37% higher, a difference so substantial that it demonstrated an independent valuation rather than tactical behaviour. Accordingly, the Court held that the receiver did not breach confidentiality or cause any prejudice to AA.

4. No

The Court found no basis for this argument. It was unclear whether the motion judge had explicitly granted standing, and even if he had, the record showed no resulting prejudice to AA. 100 Inc.'s participation did not delay the proceedings, increase costs or compromise fairness. Since appellate intervention requires a showing of prejudice or injustice, this ground of appeal had no merit.

SHORT CIVIL DECISIONS

Terry Longair Professional Corporation v. Akumin Inc., 2025 ONCA 747

[Copeland, Monahan and Rahman JJ.A.]

Counsel:

Kolers, D. Murdoch and B. Davis, for the appellants

Guy and G. Myers, for the respondent

Keywords: Civil Procedure, Class Proceedings, Appeals, Costs, Class Proceedings Act, 1992, S.O. 1992, c. 6 s. 5(1), Securities Act, R.S.O. 1990, c. S. 5 s. 138.3 (1)

Kirby v. Woods, 2025 ONCA 744

[Coroza, Madsen and Rahman JJ.A.]

Counsel:

McCarthy, M. Snoo and N. Burrows, for the appellant

Melito, M. Stangarone and A. MacEachern, for the respondent (K)

Tempesta, R. Austin and C. Robinson, for the respondent (X)

Silcoff and A. Sadinsky, for the intervener Canadian Association of Refugee Lawyers (CARL)

Waldman, C. Steven, S. Mulla and C. Arbelaez, for the intervener United Nations High Commissioner for Refugees (UNHCR)

Smith, A. Pridham and A. Faizi, for the intervener Canadian Council for Refugees (CCR)

Best and X. Pastran, for the intervener Immigration and Refugee Law Clinic (IRLC)

Balasundaram and A. Hirji, for the intervener Canadian Civil Liberties Association (CCLA)

Keywords: Family Law, Parenting, Relocation, Child Abduction, Civil Procedure, Appeals, Costs, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131, Beaver v. Hill, 2018 ONCA 840, A.M.R.I. v. K.E.R., 2011 ONCA 417, M.A.A. v. D.E.M.E., 2020 ONCA 486, 1465778 Ontario Inc. v. 1122077 Ontario Ltd. (2006), 82 O.R. (3d) 757 (C.A.)

Biswas v. Khan, 2025 ONCA 745

[Huscroft, Coroza and Monahan JJ.A.]

Counsel:

K. Parvaiz, for the appellant

J. Kung and F. Ghulami, for the respondents

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Antique Treasures of the World Inc. v. Bauer, 2003 CanLII 35349 (Ont. C.A.)

Counsel:

K. Hou, for the moving party

L.K., acting in person

Keywords: Civil Procedure, Judgments, Enforcement, Writs of Possession, Appeals, Jurisdiction, Courts of Justice Act, R.S.O. 1990, c. C. 43, ss. 17(a), 19(1)(c), 134(3)

Bishay v. Bank of Montreal, 2025 ONCA 743

[Huscroft, Coroza and Monahan JJ.A.]

Counsel:

G. Hodder, S. Pieters, and Y. Liu, for the appellant

G. Hall and A. Schechner, for the respondent

Keywords: Contracts, Interpretation, Banking, Bank Act, S.C. 1991, c. 46, s. 627, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27.

Howell v. Sun Life Assurance Company of Canada, 2025 ONCA 740

[Huscroft, Coroza and Monahan JJ.A.]

Counsel:

D. Strachan, for the appellant

B. Sunallah and H. Kennedy, for the respondents

Keywords: Labour and Employment, Civil Procedure, Striking Pleadings, Jurisdiction, Procedural Fairness, Rules of Civil Procedure, r. 21.01(3), Federal Public Sector Labour Relations Act, S.C. 2003, c. 22, s. 2, 208, 236

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be ought about your specific circumstances.