Ontario appeal court revives settling investors’ claim to $11.3 million

Two lawsuits were filed in 2017. A court later ordered part of the sale proceeds paid into court, where the amount grew to roughly $11.3 million with interest. Before trial, 11 investors settled with the Vuletics for reduced, capped amounts rather than risk litigation. The remaining investors went to trial and won, with a judge finding the Vuletics liable for fraud, conspiracy and breach of fiduciary duty, and awarding them about $10.6 million in damages, $150,000 in punitive damages and close to $5 million in costs.

In December 2024, the trial judge ruled that the settling investors had no equitable claim to the preserved funds and gave the entire amount to the investors who had gone to trial, who the appeal court noted stood to make “more than a tenfold profit” on their investments while the settling investors walked away with nothing.

The Court of Appeal, in reasons released September 2, 2026, found that ruling was wrong. Justice Dawe, writing for a three-judge panel, held that the settling investors also had an equitable stake in the property known as a purchase money resulting trust, since each of them had contributed money toward the purchase without intending it as a gift or a loan. That kind of trust arises automatically once the money is paid, the court held, and does not need a judge to declare it or require proof of wrongdoing by the developers. The panel also rejected the argument that settling meant giving up the claim, since the Vuletics never actually paid the agreed settlement amounts.

In place of the lower court order, the panel set out a four-stage payout plan: investors first recover their original contributions plus interest, the trial investors then recover their costs award of roughly $4.96 million, the $150,000 in punitive damages follows, and any remaining funds are split pro rata among everyone still owed money.

For advisors with clients in private real estate or development deals, the ruling matters: a settlement that never gets paid does not necessarily close the door on an investor’s claim to the underlying property.