Rabinowitz v. 2528061 Ontario Inc., 2026 ONCA 21
The Ontario Court of Appeal’s decision in Rabinowitz v. 2528061 Ontario Inc. is a cautionary tale for commercial real estate investors who assume that repudiation automatically leads to specific performance or that stepped interest clauses are vulnerable under the Interest Act.
No Automatic Right to Specific Performance
Even though the vendor repudiated the agreement, the Court reaffirmed that specific performance is discretionary. Commercial investment properties are not presumed unique, and the purchaser bears the burden of proving that damages are inadequate. That burden was not met.
You Don’t Get a Do-Over After Trial
The purchaser deliberately chose not to plead damages and confirmed that position at trial. Attempting to add damages after losing was rejected as prejudicial and an abuse of process. Courts will not rescue parties from failed litigation strategies.
Interest Act: Not Every Increase Is a Penalty
The real win came on the mortgage issue. The mortgage provided for 0% interest for six months, then 12% thereafter not tied to default. The Court of Appeal held that s. 8 of the Interest Act was misapplied. Parties are free to agree to stepped interest where it reflects a commercial bargain and is not triggered by default.
Considerations
- Specific performance remains an exception, not the rule.
- Plead alternative remedies early in the litigation or lose them.
- Properly drafted interest clauses can survive Interest Act scrutiny.
Brian Madigan LL.B., Broker