CITATION: Svecgroup Limited v. 2765 Lakeshore GP Inc., 2026 ONSC 3036
COURT FILE NO.: CV-25-757519
DATE: May 25, 2026
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Svecgroup Limited v. 2765 Lakeshore GP Inc., 2765 Lakeshore LP, 2749 Lakeshore Inc., Empirical Capital Corp., Olympia Trust Company, Addison Wealth Management Inc., Daniles Lion Corporation, Eggo Management Inc., and North Horizon Holdings Inc., CV-25-757519 (“Svecgroup Action”);
RE: Batory Developments Ltd. v. 2765 Lakeshore GP Inc., 2765 Lakeshore LP, 2749 Lakeshore Inc., Empirical Capital Corp., Olympia Trust Company, Addison Wealth Management Inc., Daniles Lion Corporation, Eggo Management Inc., and North Horizon Holdings Inc., CV-25-756513 (“Batory Action”);
BEFORE: ASSOCIATE JUSTICE C. WIEBE
COUNSEL: Stephen Swartz for Empirical Capital Corp. (“Empirical”) and Olympia Trust Company (“Olympia”), together “the Mortgagees”;
Adil Habib for Svecgroup Limited (“Svecgroup”) and Batory Developments Ltd. (“Batory”), together “the Lien Claimants”;
HEARD: April 29, 2026.
REASONS FOR DECISION
[1] The Mortgagees bring motions in the Svecgroup and Batory Actions under Construction Act, R.S.O. 1990, c. C.30 (CA”) section 47 seeking orders declaring that their mortgages have full priority over the claims for lien registered by Svecgroup and Batory on the subject land and discharging those claims for lien.
[2] As brought, the motions gave as their grounds that the subject mortgage is not a building mortgage and that it secured a loan advanced prior to the first lien on the subject improvement and that no written notice of lien had been received and no claim for lien was registered at or before the time of the advance, namely that the mortgage was a “prior mortgage” with a “prior advance.” As the motion unfolded, however, there was evidence that the subject mortgage was indeed registered after the first lien arose on the improvement. The Mortgagees nevertheless argued that they have priority as they received no written notice of lien and no claim for lien was registered at or before the advance.
Background
[3] The motion was commenced in early March, 2026 and was originally returnable April 27, 206. On March 5, 2026 the Mortgagees served their motion records containing affidavits sworn by Mitchell Oelbaum, the president of Vector Financial Services Limited (“Vector”), the party to whom Empirical assigned its right, title and interest in the subject loan. On April 13, 2026 the Mortgagees served Supplemental Motion Records containing affidavits sworn by lawyer, Alexandra Krancevic. They served their factums on April 17, 2026. The Lien Claimants served their responding motion material quite late, on April 24, 2026, and filed it on the day of the motion. There was an affidavit sworn by Paul Demczak, the president of Batory, and an affidavit sworn by Joseph Svec, the president of Svecgroup, and their factums. On the day of the motion, April 27, 2026, the Mortgagees also served and filed further Supplemental Motion Records containing further affidavits of Alexandra Kranovic. These late filings annoyed me. Mr. Habib explained the Lien Claimants’ conduct as being the result of his trial schedule in other matters. Because of these exceedingly late filings, I adjourned the motion to April 29, 2026 to allow counsel and me to review this material.
[4] The following facts are apparent from the material and the argument and are not in dispute. The property in issue is 0.6 acres located at 2749-2765 Lakeshore Blvd. West, Toronto (together “the Property”). Currently, there is a retail plaza and a two-storey, mixed use commercial building on the Property. The owners are 2765 Lakeshore GP Inc. and 2749 Lakeshore Inc. (together “the Owners”) which are related companies.
[5] On June 30, 2017 2749 Lakeshore Inc. acquired 2749 Lakeshore Blvd. A mortgage in favour of 1419965 Ontario Inc. (the vendor) was registered on that date. That mortgage was replaced with a mortgage in favour of Corwin Mortgage Holding Corp. on June 30, 2020. On June 18, 2019 2765 Lakeshore GP Inc. acquired 2765 Lakeshore Blvd. On the same day a partnership charge was registered in favour of 1223808 Ontario Ltd. That charge was transferred to Foremost Mortgage Holdings Corporation on October 16, 2020.
[6] Based on the August 4, 2023 CBRE appraisal attached to the late Krancevic second supplementary affidavit, the Owners planned to develop the Property. According to the appraisal, the Owners hired the architectural firm, RAW Inc., who produced plans showing an 11-storey, mixed-use development on the Property with retail use of the ground floor and condominium units above. The Owners also hired Bousfield Inc., a planning firm, to prepare a draft planning opinion letter in support of this new development and the necessary re-zoning that needed to be done. The CBRE appraisal indicated that the Property had a market value on August 4, 2023 of $13.9 million.
[7] On August 16, 2023, Empirical granted the Owners a mortgage financing loan in the amount of $9 million. This letter was amended on September 19, 2023. The letter indicated that the loan was to repay the existing mortgage and partnership buyout. A mortgage in the amount of $9 million in favour of Empirical and Olympia was registered on October 31, 2023. The loan was advanced on that day, October 31, 2023.
[8] Second and third mortgages in favour of Addison Wealth Management Inc., Daniel Lion Corporation, Eggo Management Inc. and Winnermax Capital Inc. were registered on October 31, 2023. Incidentally, these parties are co-defendants with the Mortgagees in the Svecgroup and Batory Actions. Mr. Swartz indicated that these parties did not respond to this motion.
[9] On April 4, 2024 the Owners hired Svecgroup to provide development management services for the development. In his affidavit, Mr. Svec deposed that between April, 2024 and July 25, 2025 Svecgroup provided these services and rendered invoices to the Owners. Because of non-payment, Svecgroup suspended work in August, 2025. On September 5, 2025 Svecgroup registered claims for lien in the same amount of $175,395.65 on both properties. These liens were perfected with the Svecgroup Action on December 12, 2025. There is no issue in this motion as to the proper preservation and perfection of the Svecgroup lien.
[10] In August, 2024 the Owners contracted with Batory to have Batory provide planning application services for the development. From August 9, 2024 to August 15, 2025 Batory provided these services and rendered invoices. Due to non-payment Batory suspended work in August, 2025. On September 2, 2025 Batory registered claims for lien in the same amount of $39,434.49 on both properties. These liens were perfected with the Batory Action on December 1, 2025. There is no issue in this motion as to the proper preservation and perfection of the Batory lien.
[11] The loan went into default. On May 15, 2025 the Mortgagees issued Notices of Sale for the Property. The loan was assigned to Vector on December 16, 2025. An initial sale was lost in December, 2025.
[12] On March 3, 2026 Vector entered into an agreement of purchase and sale (“APS”) to have the Property sold to Dunpar Inc. “as is, where is” with a closing following a due diligence period wherein Dunpar was to complete its investigation of the Property. A part of that investigation was an environmental site assessment report commissioned by Vector. The agreement required that Vector clear title. Mr. Swartz orally disclosed during argument that the sale price is $6.8 million.
Test under CA section 47
[13] The Mortgagees bring their motions under CA section 47(1)(b). This is the section that authorizes a court to discharge a lien, not on the basis of whether the lien is frivolous, vexatious or an abuse of process, but “on any other proper ground.” A motion under this section is akin to a motion for summary judgment. The moving party has the onus of proving that there is no triable issue concerning the grounds on which the lien is sought to be discharged, but both sides must “put their best foot forward”; see GTA Restoration Group Inc. v. Baillie, 2020 ONSC 5190 at paragraph 56.
[14] Under section 28 of the Mortgages Act, R.S.O. 1990, c. M.40 (“MA”) a person exercising the power of sale right, such as the Mortgagees here, “has power to convey or assign to and vest in the purchaser the property sold for all the estate and interest therein of the mortgagor and of which the mortgagor had power to dispose.” If the Mortgagees have full priority to the Lien Claimants, they therefore should be able to convey the Property under the APS without the encumbrances of the lien claims. I find that the priority issue is a “proper ground” for this motion.
Collateral Mortgage
[15] In the Lien Claimants factums there is reference to the subject mortgage being a collateral mortgage. A collateral mortgage is one that is registered to secure a future contingent debt obligation of a debtor such as under a guarantee. Such a mortgage does not have priority to lien claimants as there is no “advance” made under that mortgage for the purposes of CA section 78; see In The Matter of The Companies’ Creditors Arrangement Act and a Plan of Compromise or Arrangement of Clarkson Road Developments GP Inc. and Others, 2024 ONSC 4625 at paragraphs 76 and 77.
[16] The Empirical commitment letter of August 16, 2023, amended September 19, 2023, describes the “purpose” of the loan in question as being to repay the existing mortgage and fund the partnership buyout. Under “security” the letter describes the mortgage as securing this loan. The letter contains guarantees, but there is no reference to the mortgage being a collateral mortgage securing the guarantees. The mortgage is described as securing the primary debt obligation. As a result, I find that there is no triable issue as to whether the subject mortgage is a collateral mortgage – it is not.
Building Mortgage
[17] Under CA section 78(2) states that “where a mortgagee takes a mortgage with the intention to secure the financing of the improvement,” lien claimants have priority over that mortgage to the extent of any deficiency in the holdback required to be retained by the owner. This rule applies to any mortgage taken out to repay the building mortgage.
[18] In Terra Bona Developments Ltd. v. Cacoeli Kennedy Steeles LP, 2026 ONSC 585 the issue was whether the subject mortgage was a building mortgage. Associate Justice Robinson made it clear that it was the lender’s intention, not the borrower’s, that is relevant. I agree. His Honour described in paragraph 30 the evidence to be considered in determining the mortgagee’s intention in this regard: direct evidence, if available, of the lender’s subjective intention when agreeing to lend and when advancing the funds; the commitment letter; the mortgage document; whether there was a single advance or many advances; whether the advances in fact related in any way to the construction of the project; and how the funds from the lender were disbursed.
[19] In this motion there was no evidence of the lender’s subjective intention. However, there was the Empirical commitment letter attached to Mr. Oelbaum’s affidavit. As stated earlier, the letter made it clear that the loan was to repay the existing mortgage and fund the partnership buyout. There is no evidence that these earlier charges were taken to fund the project. Also attached was the Empirical Advance Statement for the Loan dated October 31, 2023. This statement confirms the single advance of $9 million on that date. Also attached was the subject mortgage registered on October 31, 2023, which document contains the loan terms. Again, none of these documents indicate that the loan was to pay for project costs or was in fact used that way. The Lien Claimants did not argue that the mortgage was a building mortgage. I, therefore, find that there is no triable issue as to whether that the subject mortgage is a building mortgage – it is not.
Subsequent Mortgage
[20] As stated earlier, the Mortgagees initially relied on the priority rules specified by CA sections 78(3) and (4). Subsection (3) specifies that where a mortgage is registered prior to the time when the first lien arose in respect of the improvement, that mortgage has priority over lien claimants to the extent of the lesser of the “actual value” of the premises at the time the first lien arose and the amount advanced prior to that time. Subsection (4) specifies that, subject to subsection (3), the mortgage lender also has priority over liens to the extent that any advances are made prior to the receipt of a written notice of lien or the preservation or perfection of a lien.
[21] This position appears to be based on two key statements in the Notices of Motion, namely that the mortgage was registered prior to the time the Svecgroup and Batory claims for lien were registered. While correct in themselves, these statements are not determinative of the issue. First, a lien does not “arise” with the registration of a claim for lien. It arises when there is supply of services and materials; see CA section 15.
[22] Second, an “improvement” for the purposes of CA section 74 is broader than the scope of specific contracts when there are several contracts with the owner. An improvement embraces all of the contracts concerning a specific endeavor or undertaking. This was the issue Justice Cavanagh faced in Clarkson Road Development GP Inc., supra., paragraph 44. In the Clarkson case, the issue was whether services and materials supplied by an architect under a separate contract with the owner for pre-construction development and prior to the subject mortgage registration and advance was of the same improvement as the later construction work that led to the subject claim for lien. His Honour held that this was all a part of the same improvement.
[23] In the case before me, with the disclosure of the August 4, 2023 CBRE appraisal in the very late second Krancevic affidavit, it became evident that prior to the October 31, 2023 mortgage registration and advance the Owners hired and obtained plans for the project from RAW Inc. and planning services from Bousfield Inc. Architects have lien rights; see CA section 14(3). There was no dispute and the evidence indicated that this early development work all related to the same improvement that was carried on later by Svecgroup and Batory. There was also no dispute that this earlier development work predated the subject mortgage registration and advance on October 31, 2023. Therefore, I am driven to the conclusion, and do conclude, for the purpose of this motion that liens arose on the subject improvement prior to the subject mortgage registration. As a result, CA section 78(3) and (4) do not apply.
[24] What does apply are the rules in CA section 78(5) and (6). Section 78(5) specifies that, where a mortgage is registered after the first lien arose on an improvement, all liens from the improvement have priority over the mortgage to the extent of any deficiency in the owner’s holdback obligation. Section 78(6) specifies that, subject to subsection (5), the mortgage can nevertheless gain full priority for any advance if, prior to the advance, the lender receives no written notice of lien and no lien is preserved and perfected.
[25] On this motion, there was no evidence as to the state of the Owners’ holdback obligation. Therefore, to succeed, the Mortgagees needed to prove that they received no written notice of lien and that no claim for lien was preserved or perfected prior to the October 31, 2023 mortgage registration.
[26] Concerning lien preservation or perfection, the affidavits filed by Svecgroup and Batory, not curiously the affidavits filed by the Mortgagees, contained title abstracts. These abstracts showed deleted instruments. They showed that indeed no claims for lien were registered prior to October 31, 2023, namely prior to the registration of the subject mortgage.
[27] Therefore, the key issue on this motion boiled down to whether the Mortgagees received a written notice of lien prior to the October 31, 2023 mortgage registration. I reiterate that it is the moving parties on this motion, namely the Mortgagees, who have the onus to prove that there is no triable issue that the Mortgagees received no such a written notice of lien. A written notice of lien is defined by CA section 1 as meaning a written notice from someone with a lien that conforms to the prescribed form. The prescribed form is Form 1 under the CA.
[28] The only evidence from the Mortgagees on this issue was the following statement in Mr. Oelbaum’s affidavits: “The Mortgagees did not receive written notice of a lien in advance of registration of the Mortgage on the Property.”
[29] I do not find that this bald statement meets the Mortgagees’ heavy onus of proof on such a critical issue. First, Mr. Oelham identifies himself as the president of Vector. Vector is the party who took an assignment of the Empirical loan on December 16, 2025, namely well after the events in issue. Mr. Oelham does not explain anywhere in his affidavit as to how or from whom he acquired his alleged knowledge of what the Mortgagees may or may not have received in notices on or prior to October 31, 2023, namely over two years earlier. He does not state that he believes this information. This is, therefore, a violation of Rule 39.01(4), thereby rendering the statement, a hearsay statement, meaningless as evidence.
[30] Second, there was no evidence from the Mortgagees themselves on this point. There was also no evidence from RAW Inc. or Bousfield Inc. on this point. The evidence from the Mortgagees was clearly within the exclusive power of the Mortgagees to obtain. The evidence of RAW Inc. and Bousfield Inc. also appeared to be within the power of the Mortgagees to obtain. They did not do so. For the purposes of this motion, I therefore draw an adverse inference against the Mortgagees, namely that there may have been a written notice of lien given to the Mortgagees prior to the October 31, 2023 mortgage registration.
[31] The fact that the Lien Claimants did not cross-examine Mr. Oelham on this point does not change my view. The issue of whether the subject mortgage is a “subsequent mortgage” (and with it the importance of the issue of notice) came to light only through the Mortgagees’ exceedingly late filing of the CBRE appraisal. It was filed no sooner than the day of the motion. It should have been filed with the original motion material given the issues as originally framed by the Mortgagees.
[32] Mr. Swartz insisted that the motion proceed given the outstanding APS. The motion proceeded accordingly. Given the onus on the Mortgagees, their evidence and the urgency of the motion, I do not fault the Lien Claimants for not seeking an adjournment to cross-examine.
[33] As a result, I find that the Mortgagees have not met their onus of proving no triable issue as to whether they received a written notice of lien prior to the registration of the subject mortgage.
Conclusion
[34] I, therefore, dismiss this motion in its entirety.
[35] As directed, the parties served and filed costs outlines for the motion. The Mortgagees filed a costs outline that shows $15,575.83 in partial indemnity costs and $22,412.22 in substantial indemnity costs. The Lien Claimants filed a costs outline that shows $11,191.05 in partial indemnity costs and $15,435.02 in substantial indemnity costs.
[36] The Lien Claimants appear to be the successful party and deserve costs. I encourage the parties to resolve the issue of costs. If they cannot, I order the following:
• the Lien Claimants must serve and file written submissions on costs of no more than two (2) pages on or before May 28, 2026;
• the Mortgagees must then serve and file written responding submissions on costs of no more than two (2) pages on or before June 2, 2026;
• any reply written submissions on costs cannot be longer than one page and must be served and filed on or before June 4, 2026.
[37] I will then render a decision as to the costs of this motion.
DATE: May 25, 2026
ASSOCIATE JUSTICE C. WIEBE