Alina Butt

TL Torys LLP More Torys LLP is a respected international business law firm with a reputation for quality, innovation and teamwork. Our experience, our collaborative practice style, and the insight and imagination we bring to our work have made us our clients' choice for their largest and most complex transactions as well as for general matters in which strategic advice is key.

In St. John's (City) v. Lynch, 2024 SCC 17, the Supreme Court of Canada reviewed the law governing the calculation of compensation for "constructive" expropriation. Lynch rounds out a 2022 decision by the Supreme Court that clarified the test for constructive expropriation—i.e., the scenario where an authority legally restricts all "reasonable uses" of a property1. In this latest decision, the Supreme Court addressed how compensation is calculated when a constructive expropriation occurs.

Contracting parties regularly deal with risks in their commercial relationships, but there are limits to managing risk, such as the common law prohibition on unconscionable or extravagant penalties. In 660 Sunningdale GP Inc. v. First Source Mortgage Corporation, 2024 ONCA 252 (Sunningdale), the Ontario Court of Appeal found that a contractual payment cannot itself be a penalty; a penalty must be a payment triggered by a breach of contract to be unenforceable as a penalty.