Admore Capital Group Gp Inc. v. Hajduk, 2025 ONSC 4533
Real estate transactions involving family members and collateral security arrangements require careful scrutiny, even when independent legal advice has been provided. The recent Ontario Superior Court decision in Admore Capital Group Gp Inc. v. Hajduk offers important lessons for transactional lawyers about the limits of relying solely on certificates of independent legal advice when unconscionability or undue influence may be at play.
The Facts
Jack Hajduk and his wife lived in a Toronto property on which Admore Capital held a second mortgage, which was registered in June 2021 and quickly went into default. Admore delayed enforcement for several months, in the hope that Jack would be able to catch up on payments. When Admore finally obtained a possession order in November 2022, the property appeared to be seriously underwater.
Rather than accept the near-certain deficiency, Admore negotiated a forbearance agreement. In exchange for allowing Jack six more months to refinance or sell the property (something he’d been unable to do during many months of default), Admore demanded additional security: a $2 million collateral mortgage on the unencumbered home of Jack’s elderly parents, Ludwik (88) and Elzbieta (70s) Hajduk, which they had owned since 1987.
The elderly couple initially refused Jack’s request, apparently with the assistance of their daughter, Eva. Upset by the refusal, Jack had sent his sister Eva a text message stating: “Because of YOU it’s been pulled. I now have a sheriff evicting our family on Tuesday. You completely FUCKED me and my life.”
Despite the initial refusal, Jack persisted and eventually persuaded his parents into agreeing to the mortgage on their home. On December 14, 2022, Ludwik and Elzbieta signed the forbearance agreement and collateral mortgage. They were supposed to receive independent legal advice via Zoom from lawyer Robert Isles. Jack and his wife were physically present during the initial meeting, but Isles said they “left the room” for the advice portion.
In the end, Jack could not refinance or sell the property, and he and his family were evicted in December of 2023. Admore sold it in July 2024 with a deficiency of approximately $732,000. It moved for summary judgment to force the sale of the parents’ home to pay for this deficiency.
The Decision
Justice Koehnen dismissed Admore’s motion for summary judgment, finding genuine issues requiring a trial concerning undue influence, unconscionability, and the adequacy of independent legal advice.
Undue Influence and Family Relationships
The court referenced Bertolo v. Bank of Montreal, recognizing that the relationship between adult children and elderly parents is one where “the possibility of influence exists.” Given Jack’s aggressive text messages and the implausibility of his being able to refinance after 21 months of failure, there was at least a genuine issue for trial about undue influence.
Unconscionability and the “Cost” of the Transaction
The court focused on section 2 of Ontario’s Unconscionable Transactions Relief Act, which allows courts to set aside security where “having regard to the risk and to all the circumstances, the cost of the loan is excessive and that the transaction is harsh and unconscionable.”
Justice Koehnen identified the real “cost” here: elderly parents providing a collateral mortgage on their debt-free home to allow Admore to avoid a virtually certain deficiency on an underwater property, in exchange for giving Jack six more months to accomplish what he’d failed to do in the previous 21 months. The benefit to Admore was “extraordinary”—transforming near-certain loss into virtually guaranteed full recovery.
The Limits of Independent Legal Advice
While Admore relied on the certificate of independent legal advice, citing the Alberta Court of Appeal’s statement in Cain v. Clarica Life Insurance Company that independent legal advice is “usually a complete answer” to unconscionability claims, Justice Koehnen found this case raised “genuine issues about the extent to which the simple presence of a certificate of independent legal advice constitutes a complete defence.”
Critical facts remained undisclosed in the record:
- Whether Mr. Isles knew about the 21-month default history
- Whether Mr. Isles knew Jack had defaulted on the very first interest payment
- Whether Admore disclosed to Isles, Ludwik, or Elzbieta the virtual certainty of further enforcement and deficiency
- Whether Admore communicated its knowledge of the MacPherson property being seriously underwater
The court noted these facts “may well be relevant for a lawyer giving Ludwik and Elzbieta independent legal advice” and that if Admore didn’t clearly communicate them, “there is an issue about the extent to which it should be entitled to rely on the mere presence of a certificate of independent legal advice.”
Claims Against Jack’s Lawyers
The court also dismissed the summary judgment motion filed by Howard Manis, who acted as Jack’s lawyer. Manis had a phone conversation with Elzbieta after the mortgage was registered. The competing versions of that conversation—whether Manis provided reassurance or merely told her to speak with her own lawyer—created credibility issues requiring a trial.
However, the court granted summary judgment dismissing claims against Peter Dale, a lawyer friend of Jack’s who had provided some early informal advice but had no contact whatsoever with the parents.
Takeaways for Transactional Lawyers
- Independent Legal Advice is Not a Silver Bullet: A certificate of independent legal advice will not necessarily protect a transaction from claims of unconscionability or undue influence. The quality and context of that advice matter.
- Disclosure Obligations: When a lender has knowledge about the likely outcome of enforcement on primary security (here, the near-certain deficiency), failing to ensure this information reaches the guarantors or their independent legal counsel may undermine the protection typically afforded by independent legal advice.
- Red Flags in Family Transactions: Transactions involving elderly parents guaranteeing adult children’s debts, especially where the benefit flows primarily to the lender rather than the guarantors, warrant heightened scrutiny.
- The Unconscionability Analysis is Contextual: Courts will look beyond the four corners of the documents to examine “the risk and all the circumstances.” Here, that included the default history, market conditions, prior failed refinancing attempts, and the lopsided benefit to the lender.
- Document the Advice Process: If you’re providing independent legal advice in similar situations, ensure your file clearly documents what information you received about the underlying obligation, what you explained to your clients, and the circumstances under which the advice was given.
- Consider Partial Summary Judgment Carefully: While the court dismissed the claim against Mr. Dale, it refused partial summary judgment for Admore and Mr. Manis, finding the issues too interconnected and fact-intensive for piecemeal resolution.
This case serves as a reminder that unconscionability remains a viable defence even in secured lending transactions, and that independent legal advice, while important, is not automatically determinative when the circumstances suggest the transaction was fundamentally unfair.
