Executive Summary: Key Legal and Evidentiary Issues

• Central challenge to the termination-on-notice clause in the standard-form CHO Transfer Payment Agreement on the basis of alleged unconscionability.
• Use of different injunction standards: the usual RJR-MacDonald test for the first (prohibitive) injunction and the “strong prima facie case” standard for the later mandatory injunction.
• Allegations of irreparable harm to Jennings Lodge’s business and reputation, and to vulnerable residents through forced or rushed relocation.
• Abuse of process concerns where a second injunction motion sought broader relief on substantially the same evidence that could have been advanced on the first motion.
• Consideration of the public, programmatic funding context and finite CHO resources in assessing balance of convenience and the feasibility of reinstating the TPA.
• Evidentiary shortcomings in proving inequality of bargaining power, improvident bargain, and ongoing harm capable of being prevented by interlocutory relief.

Facts

Jennings Lodge Inc. operated for about 38 years in Penetanguishene, Ontario as a licensed Home for Special Care under the Homes for Special Care Act, providing housing and support to people with significant mental health needs. The Ontario Ministry of Health later wound down that statutory regime and replaced it with the Community Homes for Opportunity (CHO) program, under which homes no longer held licences but participated through funding contracts.
To implement CHO, the Ministry used standard-form transfer payment agreements. The Canadian Mental Health Association, Simcoe County Branch (CMHA), signed a Ministry Transfer Payment Agreement and, as the local CHO administrator, entered into a Community Homes for Opportunity Transfer Payment Agreement (TPA) with Jennings Lodge dated September 1, 2022. Under the TPA, CMHA funded a maximum of 19 CHO beds and related supports at Jennings Lodge, while Jennings Lodge had to meet specified housing, staffing and resident-care standards. CMHA monitored compliance.
Over time, CMHA identified ongoing non-compliance issues at Jennings Lodge, particularly around resident safety and housing conditions. It communicated with the operators, and in July 2024 issued a Compliance Plan. Despite meetings and oversight, CMHA concluded that little progress was made in August and September 2024 and that risks to residents had, in some respects, increased. CMHA decided that it was in clients’ best interests to end the TPA and relocate residents to other providers.

Policy terms and termination clause

Article 10 of the TPA was central. Article 10.1 allowed either CMHA or Jennings Lodge to terminate the agreement “at any time upon giving at least 90 days’ Notice,” with “Notice” defined as written notice. Article 10.2 allowed CMHA, upon such termination, to cancel further funding instalments, demand repayment of unspent funds, and determine reasonable wind-down costs, with discretion to fund those costs subject to available funds.
On September 24, 2024, CMHA delivered a Notice of Termination to Jennings Lodge, setting January 22, 2025 as the termination date. There was no dispute that this complied with the written-notice requirements. After the notice, CMHA began working to relocate residents to other CHO homes and community residences. By January 22, 2025, all CHO residents had chosen to move and successfully transitioned. CMHA stopped paying funds under the TPA and reallocated the funding previously linked to Jennings Lodge’s 19 beds to other providers serving CHO clients.

First interlocutory injunction (Fraser J.)

On October 30, 2024, Jennings Lodge sued CMHA, seeking a declaration of breach of contract and $1 million in general damages plus special and aggravated damages. The statement of claim did not ask to stop the termination itself.
Separately, Jennings Lodge moved for an interlocutory injunction to restrain CMHA from relocating any residents from Jennings Lodge until resolution of the action or January 22, 2025, whichever was earlier. CMHA opposed, saying most residents wished to move and that it needed to support those relocations.
Justice Fraser, applying the RJR-MacDonald test, granted the injunction in November 2024. She held that there was a serious issue to be tried, including whether the standard-form TPA was a contract of adhesion and whether the 90-day termination clause was unconscionable given the alleged inequality of bargaining power and the impact on a long-standing operation. She found potential irreparable harm in damage to Jennings Lodge’s reputation and permanent loss of the business, and in harm to residents who, on the record before her, had been given “no real choice” between staying without funding or moving to unspecified placements. On balance of convenience, she concluded the greater harm lay with Jennings Lodge and the residents, and she ordered CMHA not to relocate residents until resolution of the claim or January 22, 2025. The order did not prevent CMHA from terminating the TPA on the Termination Date.
CMHA sought leave to appeal and a stay, arguing that a literal reading barred it from assisting residents who chose to move. Following a Divisional Court case conference and later agreement, the injunction was effectively stayed on terms that neither side would coerce residents about relocation and that those terms would remain until January 22, 2025. CMHA then abandoned its leave application. Ultimately, all CHO residents moved out before the Termination Date.

Second interlocutory injunction (Charney J.)

On January 12, 2025, shortly before the TPA was due to end, Jennings Lodge brought a second motion for an interlocutory injunction. This time it sought to enjoin CMHA from implementing the Notice of Termination itself “until the resolution” of the claim and to compel CMHA to “continue the performance” of the TPA. In substance, Jennings Lodge asked the court to reinstate or continue the TPA beyond January 22, 2025. Counsel clarified that the motion did not seek to force former residents to leave their new homes and return, but focused on restoring CMHA’s funding and contractual performance.
The evidentiary basis for the second motion was an affidavit that was substantially identical to the one used before Justice Fraser, with added material describing the prior injunction and appeal proceedings. By the time Justice Charney heard the motion, in November 2025, the TPA had long since terminated, the residents had all been relocated, and CMHA had reallocated its CHO funds to other clients and homes.

Abuse of process finding

CMHA argued that the second motion was barred as an abuse of process because the same factual matrix and evidence had already been used in the first injunction motion, and the broader relief now sought could have been requested at that earlier stage. Justice Charney agreed. He characterized the second motion as “litigation by installment,” where a party returns to court on the same evidence to pursue new or expanded relief it could have sought before. Given that the first motion was brought just three months before the Termination Date, and that the plaintiff did not then seek to bar termination of the TPA, the court held that bringing a second motion later to attack the termination itself constituted an abuse of process.

Mandatory injunction standards and unconscionability

Justice Charney also treated the requested order as a mandatory interlocutory injunction because it would require CMHA to take positive steps and effectively restore a terminated contract. Relying on R. v. Canadian Broadcasting Corp., he applied the “strong prima facie case” standard rather than the lower “serious issue” threshold.
He found that Jennings Lodge did not attempt to meet, and in any event did not meet, this higher threshold. On unconscionability, the court held there was no inequality of bargaining power between Jennings Lodge and CMHA in the sense described in Uber v. Heller. Both operated under a standard-form government-designed framework that CMHA itself could not negotiate. The TPA was not a typical commercial contract negotiated for profit or a consumer contract where a powerful party exploited a weaker one.
On the second branch of unconscionability, the court found no improvident bargain. There was no evidence CMHA was unduly enriched or that Jennings Lodge misunderstood the termination clause. The ability of either party to terminate on 90 days’ written notice, together with express wind-down provisions, did not amount to an unfair, one-sided transaction in the public funding context. As a result, Jennings Lodge failed to show a strong prima facie case that the termination clause was void.

Irreparable harm and balance of convenience

Justice Charney distinguished the earlier irreparable-harm analysis. By the time of the second motion, the TPA had already terminated, funding had stopped, and all residents had moved. Any reputational or operational loss to Jennings Lodge had already occurred. The court found that a late-stage injunction could not repair that past harm, and if it could be repaired, it would not be “irreparable” by definition.
Jennings Lodge pointed to an appraisal suggesting the facility was worth significantly more with a CHO “license” than without, framing the difference as unliquidated damages. The court held that such alleged loss is purely financial and can be compensated by damages if liability is established at trial, so it did not constitute irreparable harm. There was also no evidence that former residents wished to return.
On balance of convenience, the court noted that CMHA now received CHO funding for 65 participants and had allocated all of it to homes and community residences across Simcoe County, including those housing former Jennings Lodge residents. Forcing CMHA to reinstate the TPA would require it to divert or find new funds and would disrupt its obligations to existing clients. Rather than preserving the status quo, such an order would significantly alter it. The balance of convenience therefore favoured CMHA.

Outcome and monetary consequences

Justice Charney dismissed Jennings Lodge’s motion for a mandatory interlocutory injunction. He held that the motion was an abuse of process, that Jennings Lodge had not shown a strong prima facie case for unconscionability or any other basis for relief, that any harm was either already crystallized or financial and compensable in damages, and that the balance of convenience weighed against compelling CMHA to reinstate a long-terminated contract and funding stream.
No damages were awarded in either decision; both dealt only with interim injunctive relief. In the later decision, costs were left to be determined by written submissions if the parties could not agree, and no specific amount was fixed in the reasons. Accordingly, the ultimately successful party on the second motion is the defendant, the Canadian Mental Health Association, Simcoe County Branch, and as of the decisions summarized, there is no determinable total monetary award or quantified costs ordered in its favour.