Introduction

Minority shareholders in closely held private corporations are profoundly vulnerable. They are often excluded from decision-making, deprived of financial information, and left to trust the goodwill of controlling shareholders. When relations deteriorate, majority shareholders may move assets, drain value, or take other prejudicial steps before any oversight occurs. In such circumstances, delay benefits the majority. Lawyers representing a minority shareholder must therefore act early and decisively.

One of the most effective early interventions lies in section 149 of Ontario's Business Corporations Act (“OBCA”), which requires that corporations appoint an auditor unless the shareholders of a non-offering corporation have unanimously waived that requirement in writing. The provision creates an underutilized tool. Through the imposition of immediate cost and scrutiny upon an uncooperative majority, a minority shareholder can alter the balance of power long before oppression litigation begins.

Introduction: Ontario’s Pet Paradox

In recent years, pets have assumed a central place in households, families and in the hearts of pet owners. This marks a significant shift in how people conceptualize family, companionship, and emotional attachment. Statistics indicate that more than 70 percent of pet owners describe their animals as family members. This categorization has intensified since the COVID-19 pandemic, which recorded a surge in ownership as many Canadians sough comfort, stability and companionship amid social isolation. Despite this social shift, the law in Ontario continues to categorize pets as mere personal property; a categorization increasingly viewed as archaic, and out of step with expectations and understandings of the pet and pet owner bond.

This “pet paradox” refers to the disconnect between the evolved status of pets within a family unit and the legal treatment of pets amidst a familial breakdown. While Ontario has long taken the position, and continues to view and treat pets like personal property, in the recent case of Franco v Franco;Justice Kraft notably reaffirmed the classification of pets as personal property, reiterating Justice Papageorgiou’s decision in Duboff v Simpson that the ”rightful” owner of the pet was the person who purchased and paid for the pet. Despite the relational factors to consider, as laid out in MacDonald, Justice Kraft legal analysis concluded that questions of who owns a pet are resolved as matters of personal property and not by applying a best interest’s framework.

The requirement to obtain leave before commencing a derivative action under the Ontario Business Corporations Act (“OBCA”) is often viewed as an unwelcome layer of time, complexity, and risk. Ten years after the Ontario Court of Appeal signaled an end to repackaging derivative claims as oppression claims to circumvent leave in Rea v. Wildeboer, complainants still frequently opt for an oppression claim even within the acknowledged overlap between the two remedies. Recent cases provided an opportunity to reflect on how courts are currently approaching the leave test and whether historical apprehension remains warranted. Three lessons emerge.

First, the cause of action pleaded does much of the heavy lifting for both the good faith and corporate interest requirements. Second, the level of scrutiny effectively screens abusive claims without posing an insurmountable hurdle in the right case. Third, procedural orders can address minor concerns without barring meritorious actions.

Introduction

Amid the wide-ranging shifts in Canada-US relations, data sovereignty - the legal right to assert authority over data - and its connection to data security has become a pressing concern for Canadians. The advent of artificial intelligence ("AI") underscores the importance of data sovereignty. Data used to train and deploy AI systems hosted on cloud infrastructure may be subject to foreign access and jurisdictional oversight. The cross-border flow of this data can influence how AI systems are developed, governed and regulated.

Cloud providers supply the infrastructure that gives users access to storage, applications and computing resources online, eliminating the need for physical servers or local software. AI systems deployed in the cloud rely on this infrastructure to store data, train models, and deliver services over the internet. In a global cloud environment, laws from various countries may simultaneously apply to data. While major US providers offer scalable, reliable and cost-effective cloud services, data stored in a cloud environment can be subject to foreign law, even if it stays in Canada. For example, the US's Clarifying Lawful Overseas Use of Data Act (CLOUD Act), enacted in 2018, codified the principle that US law enforcement agencies can compel US-based cloud providers to produce data in their control - regardless of where that data is stored.

In my May 2025 article for the Toronto Law Journal, "The Shifting Landscape of Mortgage Enforcement: A Power of Sale Perspective in Ontario," I commented on the notable uptick in Power of Sale proceedings, a trend fueled by rising interest rates and persistent economic uncertainty. As this wave of mortgage defaults continues, real estate and litigation counsel are increasingly confronted with scenarios that extend beyond the straightforward exercise of paying out a mortgage on the borrower’s side or power of sale on the lender’s side. A particularly challenging situation arises when a guarantor is involved, creating a complex interplay of liability, security, and, in some cases, family drama.

We were recently faced with this scenario: a family member acted as a guarantor (also known as a “surety”) on a mortgage, but holds no registered interest in the property. The primary borrower has defaulted and the guarantor is now legally obligated to pay the debt. However, the borrower is being uncooperative and refusing to sell, putting the guarantor in a precarious position and liable for the debt with no control over the underlying asset. This article builds on the themes of our previous discussion by examining a powerful, and perhaps underutilized, statutory remedy for this very conundrum: Section 2 of Ontario's Mercantile Law Amendment Act (“the MLAA”). This provision allows a guarantor who pays the debt to demand an assignment of the lender’s security, effectively "stepping into the shoes" of the lender. This transforms the guarantor from an unsecured creditor with limited options into a secured creditor, armed with the full enforcement rights of the original mortgagee.

At a recent mediation, one defendant proposed a Pierringer agreement (often misspelled “Perringer”) with the plaintiff to cleanly resolve its exposure and exit—leaving the plaintiff to continue solely against the holdout defendant everyone recognized as the problem. Plaintiff’s counsel was new to Pierringers, and I stepped in to map the guardrails, to explain what gets disclosed, what does not, how to amend the pleading to limit the remaining claim to several liability, and how crossclaims fall away.

That moment on a mediation, grounded in my own experience drafting and operationalizing these deals, mirrors where Ontario now is after the Court of Appeal’s recent decision in Cadieux v Cadieux.[1] The Court has doubled down on the legitimacy and utility of Pierringers, and the bar needs to catch up.

Fiduciaries, such as trustees, attorneys, and estate trustees, are all under a legal obligation to keep proper records and accounts, in order to be able to prove that they were administering the property in their care “in an honest and prudent manner.” As recently noted by Justice Myers, fiduciaries “are accountable to the penny. The only way to hold them to account and to protect the vulnerable people under their charge is through transparency. To paraphrase Justice Brandeis, ‘Sunlight disinfects.’”

To this end, fiduciaries may be compelled to pass their accounts. When this occurs, it is incumbent on the fiduciary to provide a full and complete accounting which is properly formatted and accompanied by proper documentation, in compliance with the Rules of Civil Procedure (the “Rules”). This article explores the nature of these requirements, when imperfect accounts may suffice, and the potential consequences that may result from an imperfect accounting. While proper accounts are undoubtedly the ideal, fiduciaries are not held to a standard of perfection — rather, the standard is that of a person of ordinary care and diligence, managing their own affairs. Accordingly, the court has discretion as to how to proceed when faced with imperfect accounts.

Canadian Courts, administrative tribunal bodies, and law societies continue to move to respond to the rise in the use of generative artificial intelligence tools, like ChatGPT, in litigation. This push has been driven, in part, by an increase in the number of submitted briefs containing fictitious or 'hallucinated' AI generated legal citations.

Declaration Regimes Adopted

As 2023 was coming to a close, the Federal Court issued a Notice to the Parties and the Profession on the use of artificial intelligence in court proceedings. Consistent with several other provincial courts, the Notice required parties to inform the Court, and the other parties, if they have used artificial intelligence to create or generate new content in preparing a document that is filed with the Court. If any such content had been included in a filed document, the Notice provided that the first paragraph of the text in that document must disclose that AI had been used.

Most franchise agreements contain restrictive/non-compete covenants which require that, upon expiration or termination, the former franchisee and their principals (collectively the “franchisee”) are restricted from carrying on a similar business, for a certain time, and within a certain geographical area.

Courts are generally loath to enforce covenants against competition and will only do so where the covenant is, inter alia, reasonable. Cases dealing with the enforceability of restrictive covenants arise along a continuum, from the employment context at one end, in which there is almost no bargaining power between the parties, to the sale of a business, on the opposite end, where the parties are usually considered to be of equal bargaining power. While the general legal framework is the same, the level of scrutiny applied by appellate courts in determining whether a restrictive covenant is reasonable will be greater in the employment context than in the commercial context, due to the lesser degree of bargaining power in the employment context. As a generalization, in the franchise context, the level of scrutiny to be applied to a restrictive covenant will depend in part on whether the franchise agreement is truly a contract of adhesion (meaning that the franchisee had little ability to negotiate the agreement). Where the franchisee truly negotiated the franchise agreement, the court will likely be more inclined to apply a level of scrutiny reserved for disputes between vendor/purchaser as opposed to employee/employer.

Administrative monetary penalties (“AMPs”) are an enforcement tool for regulatory bodies to deter non-compliance. AMPs impose financial sanctions for regulatory contraventions in an efficient manner as they do not require a traditional court proceeding. Since AMPs are applied through an administrative process and do not result in a criminal record, they are viewed as administrative or civil rather than penal in nature. In some regimes, AMPs may reach the million dollar and beyond range, which raises constitutional concerns about due process and the lack of safeguards to prevent wrongful determinations of liability for contraventions.

In June 2009, Parliament enacted the Environmental Violations Administrative Monetary Penalties Act (“EVAMPA”), initiating the use of AMPs to prevent violations of environmental laws. EVAMPA provides that AMPs are enforced on an absolute liability basis as the due diligence defence and the mistake of fact defence are not available. The Act also set limits on the AMPs, with a maximum penalty for a violation by an individual being $5,000 and that of a corporation being $25,000. The regime was completed in June 2017 when the Environmental Violations Administrative Monetary Penalties Regulations (the “Regulations”) came into force. The Regulations provide the formula for calculating an AMP, including baseline penalties for different violations and aggravating factors that increase the amount of the penalty. The aggravating factors consist of a history of non-compliance, the extent of environmental harm caused, and the amount of economic gain resulting from the violation.