In 2724582 Ontario Inc v Gold, 2025 ONCA 531, the Court of Appeal for Ontario upheld a motion judge's decision that provisions within a Release preventing a releasor from making regulatory complaints rendered the Release void and unenforceable.
Factual Background
The respondent wished to refinance a second mortgage on her property and entered several mortgage transactions brokered by her real estate agent. Unknown to the respondent, the mortgage transactions involved non-arm's length lenders related to the realtor. With each successive refinancing, the respondent's borrowing costs and level of debt increased, and she ultimately defaulted.
The respondent submitted a complaint to the Real Estate Council of Ontario ("RECO") because she believed her realtor was dishonest with her. The respondent eventually signed a Release in connection with the mortgage transactions, agreeing not to take any legal action against the releasees and that she would be barred from making any complaints to any regulatory bodies by way of the following provision:
AND FOR THE CONSIDERATION OF THE AFORESAID SUM the Parties do hereby agree and undertake that they will not leave any negative online reviews, make any complaints to any regulatory body including RECO, FSCO, FSRA and LSO... Furthermore, if any complaints have been initiated, the Parties agree to rescind the complaint immediately following execution of this Release.
Legal actions were later commenced by the appellants seeking to enforce their mortgages and the respondent regarding various improprieties in the mortgage transactions. The main issue on appeal was whether the Release precluded the respondent's claim.
The Release is Void and Unenforceable for Illegal Provisions and Unconscionability
On a Rule 21 motion, the motion judge held that the Release contained an illegal provision that barred the respondent from making any regulatory complaints and was therefore void and unenforceable. One of the reasons the motion judge found that the Release and mortgage transactions were unconscionable was because there was evidence that an improvident bargain had been struck by the concealment of non-arm's length lenders, numerous illegal charges levied by the appellants on the mortgages, and the borrowing costs incurred by the respondent, which were manifestly unfair.
This was upheld by the Ontario Court of Appeal.
The Impact of Gold on Release Provisions
Parties drafting a Release should pay careful attention to any language preventing a releasor from making "any regulatory complaints". Such a provision may run the risk of the entirety of the Release being found void and unenforceable in circumstances involving unconscionable transactions, where there is a clear inequality of bargaining power between the parties.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
