Revisiting Section 8 Of The Interest Act After Rabinowitz: While Context Matters, Prudence Endures

The Ontario Court of Appeal’s decision in Rabinowitz v. 2528061 Ontario Inc., 2026 ONCA 21 (Rabinowitz), revisits the application of section 8 of the Interest Act (the “Act”), which prohibits the charging of interest on arrears of principal or interest that exceeds interest charged on the mortgage prior to default. The Court of Appeal’s reasons, which are brief in their substantive analysis of section 8 of the Act, are best understood when read together with the more detailed reasons of the trial judge, which canvass the relevant jurisprudence at greater length.

The dispute arose from a series of agreements of purchase and sale between Naftali Rabinowitz, as purchaser and 2528061 Ontario Inc., as vendor, for the purchase of approximately 45.7 acres of vacant land in Caledon, initially priced at $14 million based on an estimated 31 developable acres. As negotiations progressed and further due diligence was required, the vendor agreed to extend the purchaser’s conditional period in