Executive Summary: Key Legal and Evidentiary Issues

• Enforceability of a promissory note and personal guarantee for a $2.26 million “Payout Price” arising from a share purchase transaction.
• Whether complex construction-related counterclaims and set-off defences can legally defeat or delay a straightforward debt claim on a promissory note.
• Characterization of the defendants’ contractual and equitable set-off as unliquidated damages, and whether such set-off is available against a promissory note obligation.
• Application of Rule 20 summary judgment principles, including when partial summary judgment is appropriate despite a large, overlapping counterclaim.
• Interpretation and effect of specific SPA indemnity and set-off clauses (including sections 4, 8 and 11) on the obligation to pay the Payout Price.
• Whether execution on a partial summary judgment should be stayed, and on what terms, pending trial of a substantial counterclaim.

Background and parties
The dispute arises out of a mixed corporate, commercial and construction relationship involving a multi-unit residential development at 150 Marketplace Avenue in Ottawa. The development corporation, 1897365 Ontario Inc. (“189”), was the project vehicle. Kionas Holdings Inc. (related to the plaintiff), 150 Marketplace Ave Inc. (“150 Marketplace”) and two other shareholders initially held shares in 189, with Kionas Holdings owning 24 per cent and Jay Patry (through his entities) owning 30 per cent, while the remaining 46 per cent was held by two non-party shareholders. Over time, Patry acquired the other shareholders’ 46 per cent interest so that, by December 2023, the only shareholders of 189 were 150 Marketplace (controlled by Patry) and Kionas Holdings. Kionas Construction Inc. (“Kionas Construction”), the plaintiff, is an Ontario corporation affiliated with Kionas Holdings and was a construction service provider on the project. Its principal is Spyridon (Spyro) Dimitrakopoulos. The defendants are Patry personally, 150 Marketplace, and 189. They also sue by way of counterclaim, with Patry and his corporations as plaintiffs by counterclaim and Kionas Construction and Dimitrakopoulos as defendants by counterclaim.

Key transactional agreements and promissory note
In May 2019, the shareholders entered into a Unanimous Shareholder Agreement (“USA”) governing the ownership, development, construction, operation and financing of the 150 Marketplace Avenue project. After the project progressed for several years, the parties restructured their relationship. In December 2023, Kionas Holdings and 150 Marketplace executed a Share Purchase Agreement (“SPA”) under which 150 Marketplace agreed to purchase 60,000 shares from Kionas Holdings, being all remaining shares of 189 not already owned by 150 Marketplace. Under section 2 of the SPA, 150 Marketplace agreed to pay a Purchase Price of $2.35 million to Kionas Holdings as vendor. Separately, the SPA created a distinct payment obligation referred to as the “Payout Price.” Under section 8(c), upon closing, 150 Marketplace agreed to cause 189 to pay $2 million plus HST ($260,000), totaling $2.26 million, to Kionas Construction in two equal instalments. The first instalment of $1,130,000 was due on or before June 1, 2024, and the second instalment of the same amount on or before January 1, 2025. This Payout Price was separate from, and in addition to, the Purchase Price owed to Kionas Holdings. To implement this structure, 189 issued a promissory note in favour of Kionas Construction confirming that the Payout Price was payable by 189 to the plaintiff. Patry unconditionally guaranteed and covenanted that 189 would pay the amounts owing under the note. The court records no dispute as to the validity of either the SPA or the promissory note or the fact of non-payment.

Interest provisions and financial terms
The SPA and the promissory note contained two significant interest provisions attached to the Payout Price. First, a basic interest clause stipulated that from December 22, 2023, the outstanding amounts under the Payout Price would accrue interest at 3.7 per cent per annum, payable monthly. Secondly, an overdue interest clause provided that any overdue payments of principal or interest under the note would attract interest at 12 per cent per annum, payable on demand, from the date of non-payment until full satisfaction. These provisions anchored the plaintiff’s parallel claim for interest in addition to principal, and ultimately shaped the pre-judgment interest figure awarded by the court.

Construction services and the counterclaim’s foundation
Beyond the share sale, the parties had a construction relationship. After the USA was executed, Kionas Construction and 189 entered into an unwritten Construction Services Agreement (“CSA”), under which Kionas Construction provided construction services for the project. Following completion of the share purchase in December 2023—by which time Patry and his entities fully controlled 189—the first Payout Price instalment due June 1, 2024 was not paid. This prompted Kionas Construction to commence the action to recover the unpaid instalment. Only after the claim was issued did the defendants respond with allegations in their defence and counterclaim, asserting misrepresentation, negligence and other wrongdoing in relation to Kionas Construction’s role on the project. They claim that construction cost overages and related losses totaling about $8.5 million are attributable to Kionas Construction’s breaches of the SPA representations and warranties, breaches of the CSA, negligence and negligent misrepresentation. They further assert contractual and equitable set-off, alleging that any sums owing under the SPA and promissory note can be set off against their claimed project overages and damages. The defendants supported these positions with a very large record, including thousands of pages of documents and summaries of claimed cost overages, mainly to argue that the dispute was too complex and interconnected to be decided on a partial summary judgment motion.

SPA clauses relied on in the set-off theory
The defendants relied heavily on specific SPA clauses to ground their contractual set-off and indemnity theory. Section 4(h) assured that all compensation paid by the corporation to Spyro, Maria, the vendor and Kionas Construction had been in accordance with the USA and that the corporation had only reimbursed “valid expenses” incurred in furtherance of the project. Section 4(j) confirmed that there were no pending or threatened actions affecting the corporation or challenging the transactions, thereby forming a representation about the litigation risk profile at closing. Critically, section 11(a) provided that all representations, warranties, covenants and agreements and related indemnity rights would survive closing, while section 11(b) required the vendor, Spyro, Maria and Kionas Construction to indemnify the purchaser and its affiliates for losses arising from any inaccuracy or breach of these representations, warranties or covenants. Section 11(f) then gave the purchaser, upon notice, a contractual right to set off amounts owed under the indemnity provisions against sums owed to the vendor or Kionas Construction under the notes, treating any set-off as a reduction of the Purchase Price for tax purposes. The defendants argued that these provisions meant that the same transaction—the share purchase and construction arrangements—tied together their alleged damages and the obligation to pay the Payout Price, such that the court should not grant partial summary judgment and should instead allow a full trial to sort out the net balance.

Procedural history and triaging of the motion
Before the motion judge heard the summary judgment motion, Associate Justice Kamal held a case conference on April 28, 2025 to consider whether a summary judgment motion was procedurally appropriate. In an endorsement issued April 29, 2025, the Associate Justice granted leave for a summary judgment motion to proceed. He noted that partial summary judgment can promote access to justice and efficient resolution of disputes, that there were no significant credibility problems on the central debt claim, and that the counterclaim was sufficiently discrete to avoid inconsistent or duplicative findings. He relied on authorities such as Hryniak v. Mauldin (on the modern approach to summary judgment) and Court of Appeal decisions endorsing partial summary judgment where a straightforward promissory note claim meets an unrelated counterclaim, including 1652620 Ontario Inc. v. Cornerstone Builders Ltd. and Heliotrope Investment Corporation v. 1324789 Ontario Inc. While the plaintiff later argued that this triage endorsement effectively foreclosed the defendants’ opposition to summary judgment, the motion judge disagreed. He held that Associate Justice Kamal’s role was limited to triaging whether the motion should be heard, not deciding its merits; the evidentiary record was different and the principles of res judicata did not apply. The motion judge therefore considered afresh whether partial summary judgment was warranted.

Positions of the parties on partial summary judgment
On the motion, Kionas Construction argued that there was no genuine issue requiring a trial on its claim for the $2.26 million Payout Price and corresponding interest, because the SPA and the promissory note were clear, the note was valid, and the defendants were plainly in default for failing to pay the June 2024 and January 2025 instalments. It contended that the counterclaim was both discrete and tactical, arising only after default and long after the defendants had taken control of the project. It further maintained that legal set-off was unavailable because the defendants’ claims were unliquidated damages, and equitable set-off was not permitted against a claim on a promissory note. In line with appellate authority, it submitted that its straightforward debt claim should be resolved by summary judgment, with the counterclaim proceeding later. The defendants replied that the SPA’s express set-off clause, and the indemnity framework in section 11, made their set-off defence and counterclaim directly related to the plaintiff’s claim. They relied on decisions where courts had refused partial summary judgment in the face of linked payment and set-off issues arising out of the same contract or series of transactions, including CIBC Investor Services Inc. v. Chan, SRF Indutex Belting Ltd. v. Pentupa Inc., Baywood Homes Partnership v. Haditaghi, and 1289867 Ontario Ltd. v. Band World Mobile Stage Inc. They emphasized the scope and complexity of their evidence, the risk of inconsistent findings and the need for credibility assessments regarding the alleged construction misconduct.

Court’s analysis on summary judgment and set-off
Applying Rule 20 and the Supreme Court’s guidance in Hryniak, the motion judge adopted the standard two-step framework: first, determine whether there is a genuine issue requiring a trial based on the existing record; second, if so, consider whether enhanced fact-finding powers (weighing evidence, assessing credibility and drawing inferences) can avoid the need for a trial. The judge accepted that partial summary judgment is exceptional and must be approached cautiously, referring to the Ontario Court of Appeal’s decision in Butera v. Chown, Cairns LLP, which warns of the dangers of delay, duplication, expense and inconsistent findings when issues are split off prematurely. Nonetheless, the judge concluded that this case fell within the narrow category where partial summary judgment was appropriate. He found, as a matter of law, that there was no genuine issue requiring a trial regarding the defendants’ failure to pay the $2 million plus HST under the promissory note. The obligation to pay was straightforward, uncontested, and the defaults on the June 2024 and January 2025 payments were clear. He further held that the counterclaim was discrete for the purposes of the motion. Although grounded in the same broad commercial relationship, the counterclaim raised separate questions of construction performance, misrepresentation and negligence, and sought unliquidated damages for cost overruns rather than disputing the debt obligation on the note itself. On the legal doctrine of set-off, the judge held that there was no basis for legal set-off, because the defendants’ claim was one for unliquidated damages, whereas legal set-off traditionally requires mutual liquidated debts. He also found no foundation for equitable set-off against a promissory note claim, noting authority that such equitable set-off is not available where the plaintiff sues on a note and the defendant intends to litigate a separate damages claim. In light of these conclusions, the judge accepted that the promissory note claim could and should be severed and decided summarily, leaving the heavy, evidence-intensive counterclaim for later adjudication.

Distinguishing authorities and granting partial summary judgment
The judge carefully distinguished the authorities relied on by the defendants. In CIBC Investor Services, he noted, the case involved major credibility disputes and core factual conflicts that raised a material risk of inconsistent findings, and partial or full summary judgment was not shown to be more cost-effective or expeditious. In SRF Indutex, the unpaid invoices and the counterclaim were so intertwined that determining the plaintiff’s claim required the court to engage fully with the same issues underpinning the counterclaim; bifurcation was therefore not workable. Likewise, in Baywood Homes and Band World Mobile Stage, the initial claim and counterclaim were factually enmeshed to the point that a trial was necessary to resolve the entire dispute coherently. By contrast, the judge found that here the debt claim on the promissory note stood on its own footing and could be decided without making dispositive or overlapping findings on the extensive construction and misrepresentation allegations. In support, he endorsed Associate Justice Kamal’s earlier reliance on Cornerstone Builders and Heliotrope, where the Court of Appeal approved determining a simple note or loan claim by summary judgment despite the existence of a separate counterclaim. Concluding that a trial was unnecessary to fairly adjudicate the plaintiff’s claim, he granted partial summary judgment for Kionas Construction. The order required the defendants, jointly and severally, to pay $2,260,000 as principal on account of the Payout Price, plus $478,488.81 in pre-judgment interest calculated to January 13, 2026.

Stay of execution and payment into court
Having granted partial summary judgment, the judge turned to whether its execution should be stayed or whether the amount should be paid into court pending the counterclaim’s resolution. Rule 20.08 empowers the court to stay enforcement of a summary judgment on terms when another issue in the action or counterclaim is outstanding. Both parties accepted that the governing framework was the multi-factor test articulated by the Court of Appeal in Heliotrope. Those factors include: the merits of the counterclaim, the relationship between the judgment and the counterclaim, the defendants’ conduct, prejudice to each side, and whether the terms of a stay can be mitigated by conditions. Kionas Construction argued that there should be no stay, characterizing the counterclaim as tactical and unmeritorious, and noting the long delay between closing, taking control of the project and the first complaint. It stressed the prejudice it would suffer from being denied access to $2.26 million for years while 189 continued to enjoy full ownership of the project it had acquired. The defendants, by contrast, contended that their counterclaim had merit and was sufficiently tied to the SPA and note that the net amount owing could only properly be determined after trial. They maintained that their conduct did not warrant denying a stay and that the plaintiff would not be unfairly prejudiced because the parties still needed the counterclaim adjudicated to determine the true financial balance between them.

Balancing the Heliotrope factors and overall outcome
Applying the Heliotrope framework, the judge accepted that the timing and circumstances of the counterclaim raised questions about its strength, but held that on the record there was at least a triable and tenable issue based on the defendants’ evidence and summaries of overages. He therefore treated the merits factor as modestly supporting a stay. On the relationship between the judgment and the counterclaim, he reaffirmed that the debt claim was discrete and that there was no real risk of inconsistent fact-finding, but he acknowledged a potential for “circuity of action” if the plaintiff enforced judgment and the counterclaim later resulted in a large award the other way. He did not find the defendants’ conduct so improper as to argue against a stay. However, he concluded that the prejudice factor weighed strongly against staying execution outright, given the risk that Kionas Construction would be deprived for several years of the funds it was contractually owed while 189 continued to benefit from unpaid-for shares. He also found no practical conditions that could adequately mitigate a simple stay, particularly given the complexity and likely duration of the counterclaim litigation. Weighing all factors together, the judge opted for a middle ground. He ordered that execution on the partial summary judgment be stayed on the specific condition that within 45 days the defendants pay $2,738,444.81 into court to the credit of the action. If they fail to do so, Kionas Construction may proceed to enforce the judgment. The decision leaves costs of the motion to be determined later if the parties cannot agree, with a short timetable for written cost submissions and no current quantified cost award. Overall, the successful party on the motion is Kionas Construction Inc., which obtained partial summary judgment for $2,260,000 in principal and $478,488.81 in pre-judgment interest (a total judgment of $2,738,488.81) in its favour, though that sum must be paid into court rather than directly to it pending the outcome of the substantial counterclaim, and any costs amount has not yet been determined.