Executive Summary: Key Legal and Evidentiary Issues

• Constantine Enterprises Inc. applied for final declarations of the amounts remaining due under eight debt instruments — three promissory notes and five guarantees — after a court-appointed receiver liquidated the respondents' interests in two real estate projects.
• Respondents Sam Mizrahi, Sam M (180 SAW) LP Inc., and Sam M (180 SAW) Inc. raised five defences: limitations, allocation of receivership proceeds, alleged obstruction of a unit sale, bad faith or breach of fiduciary duty, and premature demand under the personal guarantees.
• Limitations defences were dismissed as without merit, supported by timely receivership proceedings, Mr. Mizrahi's own acknowledgment of the 180 SAW Loan in a 2024 statement of claim, and contractual limitation period waivers contained in the corporate guarantees.
• No credible evidence established that Constantine obstructed any ready, willing, and able sale of "Sam's Unit," or that bad faith or breach of fiduciary duty discharged any of the obligations.
• Allocation of receivership proceeds relating to the Retail Note remained pending before another judge and did not constitute a defence to this application.
• Each instrument contained a no set-off clause, and the respondents' defences were found to contradict the express terms of their own agreements.

Facts of the case

Constantine Enterprises Inc. ("Constantine" or "CEI") advanced funds to entities controlled by Sam Mizrahi in connection with two real estate development projects: one at 128 Hazelton Avenue in Toronto and another at 180 Steeles Ave. West in Vaughan. The financing was documented through three promissory notes and five guarantees. The Hazelton project involved a grid promissory note dated November 10, 2020 (the "Retail Note") given by Mizrahi 128 Hazelton Retail Inc. ("Retail"), guaranteed personally by Mr. Mizrahi (the "Retail Guarantee"), with an original principal amount of $2,174,130 as of November 19, 2020. The 180 Steeles Ave. West project involved two separate instruments: a grid promissory note dated December 3, 2021 given by Mizrahi 180 SAW LP ("Mizrahi Partner") in an original principal amount of $4,866,735 (the "180 SAW Note"), guaranteed personally by Mr. Mizrahi and by Sam M (180 SAW) Inc. ("Mizrahi Shareholder"); and a promissory note dated December 3, 2021 given by Mr. Mizrahi personally in the original principal amount of $9,209,071.57 (the "180 SAW Loan"), guaranteed by both Mizrahi Partner and Mizrahi Shareholder.

An event of default under the Retail Note occurred on February 28, 2022 when Retail failed to make a required interest payment. Both the 180 SAW Loan and the 180 SAW Note matured on August 31, 2022 and were not repaid. Constantine issued formal demands for payment and notices of intent to enforce security on September 22, 2022. Demand on Mr. Mizrahi's two personal guarantees — which contained a condition precedent requiring exhaustion of recourse — was made later, on April 25, 2025. No payments were made by any debtor or guarantor in response to those demands, apart from distributions later made through the receiverships. Constantine commenced separate receivership proceedings on February 22, 2024 in respect of both projects. Justice Cavanaugh granted both receivership applications by two separate orders dated June 4, 2024. The Mizrahi interests were liquidated and distributions were made to Constantine, which nonetheless remained unpaid in full, with the applicant owed approximately $36 million after all security had been realized.

Policy terms and contractual clauses at issue

Each of the eight instruments was negotiated between sophisticated commercial parties with the benefit of legal advice. The Retail Note contained a no set-off clause, a representation by the borrower as to the note's validity and enforceability in accordance with its terms, and an obligation to pay enforcement costs including legal fees. The Retail Guarantee was an unconditional continuing guarantee with no set-off, an indemnity for costs, and a condition requiring Constantine to exhaust its recourse against the borrower and realize on all security before making demand. The 180 SAW Note similarly included a no set-off clause, an August 31, 2022 maturity date, and an obligation to pay enforcement costs. The Mizrahi SAW Guarantee — Mr. Mizrahi's personal guarantee of the 180 SAW Note — was an unconditional continuing guarantee requiring Constantine to "pursue the Debtor and any other guarantor" and realize on all security prior to making demand, with a waiver of limitation periods acknowledged as a "business agreement." The 180 SAW Loan included a no set-off clause, an August 31, 2022 maturity date, and an obligation to pay enforcement costs. The three corporate guarantees — the Mizrahi Shareholder SAW Note Guarantee, the Mizrahi Partner Guarantee, and the Mizrahi Shareholder SAW Loan Guarantee — each contained unconditional guarantee terms, no set-off provisions, limitation period waivers acknowledged as business agreements, and no requirement to exhaust recourse before making demand.

Reasoning and analysis

Justice Dunphy addressed each of the five defences raised by the respondents. On the limitations issue, the court noted the defence was raised for the first time in the respondents' factum filed just one week before the hearing, and not in the responding affidavit. As to the five corporate instruments, the receivership proceedings commenced on February 22, 2024 fell well within two years of the maturity and default dates. As to the 180 SAW Loan personally owed by Mr. Mizrahi, the court found that his April 2024 statement of claim specifically admitted the loan's existence and outstanding status, constituting an acknowledgment under s. 13(1) of the Limitations Act, 2002 — and this application was commenced within two years of that acknowledgment. Additionally, two emails surfaced during the hearing that confirmed the loan's existence without disputing its validity. The four corporate guarantees each contained express limitation period waivers satisfying s. 22(5) of the Limitations Act, which permits extension of limitation periods by agreement up to the 15-year maximum under s. 15, and the court found the waiver language plainly sufficient.

On the alleged obstruction of the Retail unit sale, the court found no credible evidence that a sale of "Sam's Unit" was ever ready, willing, and able to close. Mr. Mizrahi admitted on cross-examination to never having attempted to close the sale, and the only financing evidence he produced consisted of two highly conditional and dated commitment letters — one from 2020 and another that expired by its terms in 2022. The court further held that conditions precedent from a Term Sheet dated October 25, 2020 that did not find their way into the Retail Note could not override the note's clear and unambiguous terms.

On the bad faith and breach of fiduciary duty defence, the court observed that the same allegations had been raised and dismissed three times previously — twice through struck statements of claim (the second without leave to amend, by Justice Black on March 13, 2026) and once on the motion to convert this application to an action (also dismissed by Justice Black on March 13, 2026). The court found the allegations vague and unsubstantiated, and held that a failed business negotiation — such as the proposed sale to a Korean investor — does not establish bad faith or breach of fiduciary duty, still less a basis to alter clearly worded obligations that expressly disclaimed any right to set-off.

On the allocation issue regarding the Retail receivership proceeds, the court noted the matter was pending before another judge and declined to express any view on its merits. The court observed, however, that even if Mr. Mizrahi succeeded on that point, it would reduce — not extinguish — his liability under the Retail Guarantee, and the allocation dispute therefore raised no defence to the present application.

On the exhaustion of recourse defence, the court found that Constantine had in fact appointed receivers, the receivers had sold the assets and distributed the proceeds, and nothing further could be done to exhaust recourse. The unresolved allocation dispute was unrelated to the act of realizing on security and did not affect the analysis.

Ruling and overall outcome

Justice Dunphy granted Constantine's application in its entirety. Judgment was ordered against Mr. Mizrahi personally, as guarantor, in the amount of $2,718,507 (as of April 30, 2025) in connection with the Retail Note. Judgment was ordered against Mr. Mizrahi as debtor, and against Mizrahi Partner and Mizrahi Shareholder as guarantors, jointly and severally, in the amount of $21,465,963 (as of April 30, 2025) in connection with the 180 SAW Loan. A further judgment was ordered against Mizrahi Partner as debtor, and Mr. Mizrahi and Mizrahi Shareholder as guarantors, jointly and severally, in the amount of $11,824,659 (as of April 30, 2025) in connection with the 180 SAW Note. The combined judgments total $36,009,129 as of April 30, 2025, with the parties directed to finalize a judgment form bringing interest forward to June 15, 2026 and addressing contractual enforcement costs — including legal fees — as provided for in each of the relevant instruments.