Bill 10: Protect Ontario Through Safer Streets and Stronger Communities Act - A High-Stakes Shift For Ontario Landlords
BY JOHN FOX, SARAH HOOPER AND ALEXANDER CAPUTO
WHAT PROHIBITIONS ARE INCLUDED IN BILL 10 THAT LANDLORDS SHOULD BE AWARE OF?
There are two main prohibitions, as follows:
- Knowingly permitting illicit activity (section 2) - Landlords have a defence if they take "reasonable measures" to prevent their properties from being used for the production or traffi cking of illicit drugs (a "prescribed offence"). The exact defi nition of "reasonable measures" remains unclear, meaning that landlords do not know what actions will be considered suffi cient to mount a defence.
- Knowingly possessing proceeds from a prescribed offence (section 3) - Unlike the fi rst provision, this section does not offer landlords a "reasonable measures" defence, making it a more severe liability. Whether accepting rent payments after discovering illegal activity would violate this rule remains uncertain, leaving landlords vulnerable to unintended consequences.
WHAT CAN AUTHORITIES DO?
The Protect Ontario Through Safer Streets and Stronger Communities Act (the "Act") provides law enforcement with extensive powers, including the ability to remove individuals from rental properties, close commercial properties, seize property tied to, restrict access to premises, and in certain cases, arrest suspects without a warrant, all in relation to a prescribed offence. Additionally, obstructing offi cers in their duties may result in penalties under section 10 of the Act.
WHAT COUNTS AS "REASONABLE MEASURES"?
Landlords are left wondering: How can I prove I took "reasonable measures"? Does that mean adding security cameras or increasing property inspections?
Without clear guidance, landlords may struggle to ensure compliance, potentially leading to unintended legal trouble.
Penalties are steep, with fi rst-time infractions carrying fi nes ranging from $10,000 to $250,000, and repeat offenses accruing daily penalties. Given the risks, landlords may feel pressured to adopt stricter oversight— whether through tenant screening, surveillance, or proactive lease enforcement.
HOW WILL THIS IMPACT NON-PROFIT HOUSING?
Non-profi t landlords—particularly those providing supportive housing for vulnerable tenants—face unique challenges under this Act. The law holds directors, including volunteer directors, personally liable, making board membership riskier for those working with high-needs populations. Additionally, any requirement to implement expensive security measures could force non-profi ts to raise rent or cut services, further shrinking Ontario's affordable housing stock. If tighter enforcement discourages organizations from supporting vulnerable communities, the housing crisis could worsen for those at risk.
WHAT COMES NEXT?
While the Act aims to curb illegal drug activity, it also raises serious concerns about fairness, clarity, and practical enforcement. Landlords now bear the burden of demonstrating they took "reasonable measures", but without clear guidelines, the risks—especially for non-profi ts—are substantial. The regulations are yet to come. Before they do, more consultation with housing experts, legal professionals, and tenant advocates will be crucial to refi ning the law and protecting responsible landlords and their directors.
Step Carefully: 30-Day Clause Clarified
BY PHILIP HOLDSWORTH
Multi-tiered dispute resolution clauses—also known as "step clauses"—are common in commercial contracts containing agreements to arbitrate. Especially in sectors like construction, architecture and engineering, parties often agree that disputes must first go through informal negotiation, then mediation, before finally proceeding to arbitration.
These clauses promote efficiency and preserve commercial relationships. By sequencing the escalation of conflict, they encourage parties to resolve issues early, before costs and positions harden; however, step clauses can also complicate matters. When poorly drafted or rigidly interpreted, they risk becoming procedural traps, creating uncertainty about when arbitration rights crystalize or expire, and whether an arbitrator has jurisdiction to hear the dispute at all.
In J.P. Thomson Architects Ltd. v. Greater Essex County District School Board, 2025 ONCA 378 (Thomson), the Court of Appeal recently addressed precisely the procedural tension created by a dispute clause which required the parties to refer their disputes to mediation (before arbitration), if they could not be resolved within 30 days of the dispute arising.
In determining the issue, the Court of Appeal underscored that interpreting the contractual requirements as setting a minimum waiting period, not a time limit to seek mediation (before unlocking the right to arbitrate), is consistent with the business sense intent of such clauses, to give the parties space to resolve their disputes.
FROM TRUSTED PARTNER TO PROCEDURAL ROADBLOCK
J.P. Thomson Architects served the Greater Essex County District School Board for nearly 50 years. In 2016, it secured new work through contracts that incorporated the Ontario Association of Architects' standard form language—including a multi-tiered dispute resolution clause (GC18) that required negotiation, then mediation, and finally arbitration if disputes could not be resolved.
When performance issues and a fee dispute arose in 2020 and 2021, Thomson attempted to initiate mediation under GC18. The Board refused, arguing that any disputes were too old—beyond the "30-day window"—and therefore no longer eligible for mediation or arbitration. The application judge agreed, interpreting the clause as requiring mediation to be requested within 30 days of the dispute arising. Because Thomson's request came later, the Court held that its right to arbitrate had been extinguished.
DEADLINE OR WAITING PERIOD?
On appeal, the Court of Appeal unanimously overturned the lower Court's ruling, holding that GC18 did not contain a hard deadline. Rather, the clause provided that if a dispute "cannot be resolved by the parties within thirty (30) days of the dispute arising," it "shall be referred to mediation, upon the request of either party."
While the clause required parties to attempt to resolve disputes for "thirty (30) days" before moving to mediation, it said nothing about losing the right to mediate after that period. The Court found that this phrasing sets a minimum waiting period, not an expiry. It gives the parties at least 30 days to resolve the matter informally before one can escalate it to mediation—not a ticking clock that cuts off rights if mediation isn't requested in time. Interpreting it otherwise, the Court said, would read in language that simply isn't there.
This interpretation reflects commercial logic. In long-term professional relationships, disputes rarely crystalize in a moment. Requiring immediate formalization or legal action undermines the very purpose of step clauses—to encourage early, flexible resolution without litigation.
LET ARBITRATORS DECIDE
Equally important, the Court held that the application judge had overstepped in making factual findings about whether a dispute still existed. Under well-established jurisprudence, including Patel v. Kanbay, if it is arguable that a dispute falls within an arbitration clause, any questions about arbitrability, including whether procedural steps were satisfied, should be left to the arbitrator.
The judge erred by parsing correspondence between the parties to determine whether disputes had been resolved or whether the mediation request was timely. In doing so, she effectively decided the jurisdiction of the arbitrator—a decision that belongs to the arbitrator when the parties have agreed to a staged process culminating in arbitration.
IMPLICATIONS FOR CONTRACT DISPUTES
This decision offers important guidance for both contract drafters and those managing disputes under existing agreements:
- Step clauses must be clear. If the intention is to impose a hard deadline to initiate mediation or arbitration, the contract must say so explicitly. Courts will not infer such limits from vague or ambiguous timing language.
- Procedural flexibility supports commercial relationships. A step clause that penalizes parties for not initiating formal ADR within 30 days discourages the kind of informal dialogue these clauses are meant to promote.
- Arbitrators, not Courts, determine arbitrability where it's arguable. Courts should not short-circuit the arbitration process by making premature findings about dispute resolution steps. If arbitration could apply, it is for the arbitrator to decide whether it does.
For architects, engineers, consultants, and institutional clients alike, the lesson is not just about timing—it's about preserving the right forum for resolving disputes. Step clauses should be carefully drafted and applied with an understanding of how they function in real-world relationships. And when a dispute arises, counsel should be cautious not to treat procedural hurdles as jurisdictional cliffs.
The Court's decision in Thomson rightly restores balance to the interpretation of step clauses. By treating the 30-day reference as a minimum waiting period, not a deadline, and by reaffirming that arbitrators decide their own jurisdiction, the Court prevented procedural formalism from undermining contractual rights to dispute resolution.
Multi-tiered dispute clauses are meant to serve parties—not stifle them. But that only works when the language is clear, and the process is respected. When in doubt, step carefully, but don't mistake the wait for a wall.
Waiving Dissent: When Silence Isn't Golden
BY CHARLIE KIM AND MATTHEW MCGUIGAN
INTRODUCTION
The Business Corporations Act (Ontario) (the "OBCA") permits parties to shareholders' agreements to waive their statutory dissent rights. Notably, in order for the waiver to be enforceable it must be made with clear and direct language.
In the 2023 case of Husack v Husack ("Husack"), affirmed by the Ontario Court of Appeal in 2024, the Court provided guidance as to what constitutes "clear and direct language" in the context of waiving shareholder dissent rights under the OBCA. "Clear and direct language" may be present even if the shareholders' agreement does not explicitly make reference to the specific dissent right being waived.
OBCA DISSENT RIGHTS
Section 185 of the OBCA provides shareholders with the right to dissent to certain corporate actions, including the sale, lease or exchange of all or substantially all of the corporation's property. A dissenting shareholder has the right to sell its shares to the corporation at fair market value
Husack v Husack
FACTUAL BACKGROUND
The case of Husack involved a family owned business, Frank Husack Holdings Inc. ("FHH"). The shareholders of FHH consisted of:
(i) Frank's four children, who each held non-voting common shares; and
(ii) the Estate of Frank Husack (the "Estate"), which held voting shares.
The shareholders of FHH were parties to a unanimous shareholders' agreement (the "USA"). The USA contained the following two provisions at issue in the case:
Section 3.01: Notwithstanding the foregoing, the Estate shall have the right at its option to cause the Corporation to sell all or substantially all the assets owned by it to such person or persons at such time and upon such terms and conditions as the Estate in its sole and exclusive discretion considers advisable.
Section 9.01: It is the intent of the parties that such provisions of The Business Corporations Act or any successor legislation granting rights to shareholders, which may be in conflict with the provisions of this Agreement, are hereby waived, and the provisions hereof shall govern their dealings among themselves (to the extent allowed by law).
Frank's widow, Evelyn Hussack, was one of the estate trustees of the Estate. In 2019, Evelyn took steps to begin selling all of the assets of FHH pursuant to section 3.01 of the USA. One of the common shareholders, Donna Husack, wished to enact her dissent rights under section 185 of the OBCA. She applied to the Court, arguing that the USA did not contain a provision expressly opting out of the OBCA dissent regime. Donna argued that although the USA gave the Estate the right to trigger a disposition of all of the assets, it did not clearly and expressly oust the shareholders' dissent rights in this circumstance.
DECISION
The Court followed the test set by the Supreme Court of Canada in Tercon Contractors Ltd v British Columbia (Transportation and Highways) ("Tercon") to assess the enforceability of a waiver provision:
(i) does the exclusion clause apply in the circumstances?
(ii) if yes, was the exclusion clause unconscionable at the time the contract was entered into?
(iii) if no, should the exclusion clause be unenforceable on public policy grounds?
The Court ultimately found that the combined effect of sections 3.01 and 9.01 of the USA waived the statutory right of the shareholders to vote upon a proposal to sell all of the assets of the corporation. By extension, these two sections also ousted the dissent right stemming from this right to vote.
Rounding out its analysis, the Court found that the waiver was neither unconscionable nor contrary to public policy.
The Court's decision indicates that dissent rights arise from other statutory rights provided to shareholders. The statutory dissent rights are not standalone, but rather stem from a shareholder's right to vote on certain fundamental corporate decisions. Thus, in Husack a waiver of the right to vote on the decision to sell all of the assets of FHH was equally a waiver of the right to dissent to such a decision.
KEY TAKEAWAYS
Although a waiver of statutory rights must be done by way of clear and direct language, the Court in Husack found that the waiver does not need to specifically reference the specific right being waived. Rather, a general waiver of any statutory rights that conflict with the terms of the shareholders' agreement is sufficient, so long as there is a substantial overlap between the situation that the contractual provision seeks to govern and that for which the statute seeks to provide rights.
Additionally, the Court held that dissent rights afforded under section 185 of the OBCA may be waived when the corresponding statutory right providing the shareholders with the right to vote on the applicable issue is waived.
In light of the above, shareholders should be cognizant of the following key takeaways:
(i) Husack appears to allow for a more indirect waiver of dissent rights, both: (i) by way of a general waiver clause that does not reference a specific dissent right; and (ii) by the waiver of the voting right from which the dissent right stems. Nevertheless, majority shareholders that want to ensure minority shareholders have effectively waived their dissent rights should ensure that the waiver is explicit to avoid ambiguity. For example, a shareholders' agreement with a drag-along right, requiring a minority shareholder to vote to sell all of the assets of a corporation should likewise include an explicit waiver of the shareholders' dissent rights under section 185 of the OBCA.
(ii) Conversely, minority shareholders that do not wish to inadvertently waive their statutory dissent rights should be wary of provisions providing for a general waiver of any statutory rights conflicting with the shareholders' agreement. Additionally, minority shareholders should be cognizant that the waiver of a right to vote on the issues covered by section 185 may also constitute a waiver of the right to dissent on such an issue.
(iii) Finally, majority shareholders should be cognizant that waivers of minority shareholder dissent rights will be ineffective in the face of unconscionability or on public policy grounds.
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