A recent Ontario Court of Appeal decision, Rabinowitz v. 2528061 Ontario Inc., 2026 ONCA 21, was allowed in part, as the Court upheld a lower court’s decision not to grant specific performance in a failed commercial real estate transaction, while also finding that the 12% interest charged under a mortgage did not infringe the Interest Act.
Despite finding that the seller had repudiated the agreement of purchase and sale, the trial judge declined to grant specific performance.
Specific performance is an equitable, discretionary remedy grounded firmly in the facts of the case. The Court of Appeal found that the trial judge correctly applied the governing principles to determine that the purchaser did not meet the burden of demonstrating that:
1) The property was unique; and
2) Damages would be an inadequate remedy.
Regarding the mortgage issue, the sixth-month mortgage was given 0% interest, then 12% thereafter with no tying of the increase of the mortgage interest to any default. The Court of Appeal held that s. 8 of the Interest Act was misapplied and the clear words of the parties’ mortgage agreement can survive scrutiny if commercially reasonable in the circumstances.
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